Remittance inflows dropped off 14 per cent year-on-year to $1.50 billion in May on the back of the global coronavirus pandemic, in a departure from historic trends that saw money sent by Bangladeshi migrant workers go up ahead of Eid-ul-Fitr.
This meant the contagion, which has caused havoc in the oil-rich countries where Bangladeshi migrant workers are mostly based, has hit the incomes of the expatriates so hard that they could not send a higher amount for their families and relatives back home.
However, the country received $16.36 billion between July last year and May this year, up 8.72 per cent from a year earlier, showed data from the Bangladesh Bank.
Migrant workers usually send in larger amounts of remittance during any national crisis relative to typical times to help the recipients back home tackle the situation.
But the ongoing situation is completely different as remittances from the Middle East and East Asia to North America and Europe have seen a steep decline due to the ongoing financial meltdown.
Besides, eight countries in the Middle East are now trying to deport expatriate Bangladeshis, a move that will put an adverse impact on the country's macro-economic stability in days ahead.
One such case is Palash Osman, a resident in Nabinagar upazila of Brahmanbaria, who went to Saudi Arabia just a few months ago by borrowing Tk 3 lakh from a local non-governmental organisation before the rogue virus surfaced.
He started working at a shop that sells electronics products.
"I got the salary for only one month. After that, I became unemployed," he told The Daily Star over the phone last month.
Like Osman, more than 7 lakh Bangladeshi workers may be forced to return home from the Middle East as the ratio of unemployment is gradually increasing in the oil-rich countries, said officials of the ministry of expatriates' welfare and overseas employment.
A majority of workers usually work on a contractual basis in the Middle Eastern countries and a good portion of them have already lost jobs.
Nearly 80 per cent of the 1.20 crore-odd Bangladeshi migrant workers are based in the Middle East.
But the situation was not as bad during the last global recession. For instance, during the global financial crisis in 2007-08 Bangladesh even enjoyed an increased trend of remittance.
Global remittance dropped 5.5 per cent year-on-year in 2009 but Bangladesh enjoyed 19.35 per cent growth.
But this time remittance began a downward trend from January when the pandemic was in its nascent stage.
Both the central bank and the government had earlier projected that remittance would touch the $19-billion mark this fiscal year given an upward movement in the first half.
In fiscal 2018-19, migrant workers sent home $16.41 billion, up 9.59 per cent year-on-year. But the current trend shows that it would hardly go past the $17 billion-mark this fiscal year.
The country faced a large deficit both for products and services in its balance of payments in the last one decade, but remittance helped protect the current account from a large deficit, said Zahid Hussain, a former lead economist at the World Bank's Dhaka office recently.
In some cases, the current account enjoyed robust a balance riding on remittance, which widened the country's foreign exchange reserve to a great extent, he said.
In fact, remittance has been spearheading a silent economic revolution in Bangladesh since its independence as it helped make the rural economy vibrant.
Although the inflow had faced some obstacles in the wake of a fall in oil prices, remittance got back its momentum within the shortest amount of time due to a steady outflow of migrant workers.
The government started to record both exports of manpower and remittance in 1976 when about 6,000 workers went abroad and sent $23.71 million.
The infrastructure development boom following the rise in oil prices in 1973 fuelled the demand for labour migrants in the Middle East and especially in the Gulf States: Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the UAE.
Remittance flow reached $630 million in 1983. Although it fell the following year, it maintained the upward growth from 1986.
In 1984-85, the oil prices fell and the migration flow ebbed, although the rising employment in service and maintenance sectors kept the demand for labour migrants high.
The newly industrialised countries in South-East Asia such as Singapore, Malaysia and South Korea went through a similar expansion boom and needed migrant workers to fill the demand for unskilled workers.
In general, the employment of labour migrants abroad is quite sensitive to the prevailing sociopolitical environment of the receiving countries, according to a study of the International Organisation for Migration.
The Gulf Crisis in the 1990s also forced the return of 56,000 workers to Bangladesh from Kuwait and Iraq and the Asian Financial Crisis of 1997-98 resulted in a decrease in the demand for labour migrants.
"But the existing situation is more critical than the previous ones as we do not know how long it will take to normalise the global economy," Hussain said.
Oil price is one of the major components for the rebound of the global economy and the price will return to its previous position if countries like China, India and the US can restart full-fledged economic activities, he said.
Benchmark Brent crude was down 46 cents, or 1.2 per cent, at $37.38 a barrel on Monday. US crude fell $1.04, or 2.9 per cent, to $34.45 a barrel, according to Reuters.
Hussain feared that the global oil market might take nearly two years to return to its previous situation.
Federal Reserve Chair Jay Powell warned on May 17 that a full US economic recovery may take until the end of next year and require the development of a COVID-19 vaccine.
"Remittance has a strong correlation with the global market and vaccine is highly important to get rid of the falling trend," Hussain said.
At the same time, the government must control the virus at home.
"If Bangladesh fails to do so, it will have to face a dire strait. No country would import manpower from Bangladesh if the country can't bring the situation under control. "This will create a catastrophic situation for remittance," he said.
And this will impact the country's GDP growth and the rural economy as well.
The impact of 1 percentage point increase in the remittance share of GDP on per capita GDP growth can range between 0.12 and 0.74 percentage points, according to a WB study.
The lower remittances, however, did not create an adverse impact for the country's current account given the fall in import.
Import slid 62 per cent year-on-year to $1.95 billion in April and exports fell 82.9 per cent to $520.01 million.
Between July and February, the current account deficit, which records a nation's transactions with the rest of the world, stood at $2.64 billion, down 37.13 per cent year-on-year.
The lower import has also contributed to keeping stable the foreign exchange reserves, which stood at $32.84 billion as of May 17.
"But the country's banking sector will have to face problem in the days to come if remittance continues this declining trend," said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
Import declined in April, but it could go up within the next few months as the government has started to reopen the economy, he said.
Lenders have two major sources for foreign currencies: remittance and export. But both are now in a critical situation.
So, banks will face problems in settling letters of credit as exports are facing a negative trend as well, Rahman added.
"The government should take immediate measures to boost remittance flow," said Tasneem Siddiqui, chair of the Refugee and Migrating Movements Research Unit at the Dhaka University.
The authorities should take immediate steps to stop the forced repatriation of migrant workers and this will help stop the collapse in remittance, she said.
"This is an unprecedented situation. The migrant workers have never faced such a consequence," she said.
More than 1 lakh migrant workers have so far been deported and thousands of them are waiting to return home, she said last month.
The host countries are deporting migrant workers violating international rules, said Siddiqui, also a professor of political science at the university.
As per the United Nations rules, no nation is allowed to deport foreign workers during a crisis.
"The government should raise the issue with the global community," she said.
If the government takes proper measures, remittance will make a turnaround in three to four months, said Abdul Alim, president of the Female Worker Recruiting Agencies Association of Bangladesh.
The demand for female workers as housekeepers, caregivers, beauticians, cleaners, medical technicians, paramedics, physiotherapists and nurses will not decline, he said.
"It is interesting that most of the Middle East countries are now asking to send back male workers, but not the female ones."
The government should improve the capacity of the workers immediately by giving training.
The government has about 70 training centres and they will produce a better result if the centres are handed over to the private sector under the supervision of the government, Alim added.