BEIRUT - In its first update on the inflow of remittances to developing countries since the outbreak of the global financial crisis, the World Bank estimated remittance inflows to Lebanon at $6 billion in 2008, constituting an increase of 4 percent from 2007, according to a report in Lebanon This Week, the economic publication of the Byblos Bank Group.

Lebanon's remittances stood at $5.77 billion in 2007, $5.2 billion in 2006 and $4.9 billion in 2005, according to the report.

Globally, Lebanon was the 18th largest recipient of remittances in 2008, ranking ahead of Vietnam, Serbia and Montenegro and Ukraine, and coming immediately behind Indonesia, Morocco and Pakistan.

Lebanon was the third largest recipient among 12 countries in the Middle East and North Africa (MENA) region included in the survey, coming behind Egypt with $9.5 billion and Morocco with $6.7 billion.

In addition, Lebanon was the fourth largest recipient of remittances among 36 Upper Middle Income Countries covered by the survey. It ranked ahead of Serbia and Montenegro, Brazil and Russia, and came behind Romania, Poland and Mexico. Lebanon's 2008 rankings were unchanged globally, regionally and among Upper Middle Income Countries from 2007.

Remittances to Lebanon account for 17.4 percent of total remittances to the MENA region in 2008 compared to 18 percent in 2007 and 19.5 percent in 2006. They account for 7.6 percent of remittance inflows to Upper Middle Income Countries in 2008 relative to 7.4 percent in each of 2007 and 2006, while they represent 2.1 percent of aggregate remittances to developing economies this year, almost unchanged from 2.2 percent in 2007 and 2.3 percent in 2006.

Remittance inflows to Lebanon accounted for 1.6 percent of the global inflow of remittances in 2008, unchanged from 2007 and similar to 1.7 percent in 2006. Also, the 4 percent projected growth of remittances to Lebanon for 2008 is lower than the 8 percent rise in inflows to the MENA region and the 7 percent rise for developing countries this year, but higher than the global and Upper Middle Income Countries annual increase of 5.5 percent and 1.6 percent, respectively.

Meanwhile, the World Bank estimated expatriated remittances to Lebanon to be equivalent to 24.4 percent of GDP in 2007, the fifth highest such ratio in the world behind Honduras, Lesotho, Moldova and Tajikistan, as well as the highest in the MENA region and among Upper Middle Income Countries. In comparison, remittances to Jordan were equivalent to 22.7 percent of GDP, followed by Morocco with 9 percent of GDP, Yemen with 6.1 percent of GDP, Egypt with 6 percent of GDP, Tunisia with5 percent of GDP, Algeria and Syria with 2.2 percent of GDP each and Iran with 0.5 percent of GDP.

The World Bank said remittance flows to developing countries began to slow down in the third quarter of 2008 due to the global financial crisis. It expected the slowdown to deepen further in 2009, but added that the magnitude of this slowdown is hard to predict, given the uncertainties related to global growth, commodity prices and exchange rates. It said flows to the MENA region have remained strong and relatively stable in 2008 but are expected to regress by 6.7 percent in 2009 in a base case scenario and to drop by 13.2 percent in a worst case scenario. It also estimated remittances to the MENA region to rise by 5.7 percent in 2010 in a base case outcome and to regress by 1.5 percent in a low case scenario.

The World Bank also noted that remittances from the GCC account for 26 percent, or $9 billion, of flows to the MENA region in 2008. It said that a continuation of the recent drop in oil prices would make the GCC economies more vulnerable and, combined with the impact of the crisis on the GCC's banking sectors, it could potentially lead to a significant decline in activity in the construction sector that has employed a large number of migrants in recent years.

The World Bank estimated that, under its base case scenario, remittance flows from the GCC countries would fall by 9 percent in 2009 compared to a rise of 38 percent in 2008. - Daily Star