Friends and family members who are working abroad are Serbia’s best export investment judging by the amount of money they sent to their loved ones in Serbia which, up until August this year, amounted to 2.3 billion euro – the data collated by the National Bank of Serbia (NBS) shows.
“ According to preliminary data based on the remittances coming from abroad, i.e. personal money transfers, during the eight months of 2018, they amounted to 2.3 billion euro, which is 20.8 per cent more than in the same period of the previous year. A total of 1.2 billion euro of registered remittances arrived in Serbia, while the estimated value of unregistered remittances, not done via bank accounts and wire money transfers, amounted to about 1.1 billion euro. The influx of foreign remittances is relatively stable and its share in the gross domestic product currently stands at about 8 per cent, which we to be the overall percentage for this year as well”, says the central bank.
In the observed period, a total of 1,284 million transactions were executed via bank accounts and wire money transfers with the average amount sent is around 930 euro. The highest amount of remittances was made in August this year – 365.3 million euro.
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The World Bank’s data, expressed in US dollars, shows that Serbs living abroad have sent a total of $41.5 billion to their loved ones in Serbia in the last ten years, which, calculated at the current exchange rate, amounts to 36.5 billion euro. On average, they send us 3 billion euro annually, which is considerably more than the foreign direct investors invested in the same period. This is confirmed by Dr Vladimir Grečić, member of the Serbian Academy of Economic Sciences and an expert on migration.
“In 2016, the influx of foreign remittances was 36 per cent higher than the FDI influx in Serbia. In 2017, the diaspora sent more than $3.6 billion, and the World Bank data show that this is an increase of 12 per cent compared to the previous year. In relation to the gross domestic product (GDP), migrants’ remittances amounted to 8.4 per cent of the national GDP”, said Grečić, adding that practically two-thirds of remittances, or 64 per cent of them, came from EU countries. Of the European countries, most remittances came from Germany (39.4 per cent) and Switzerland (23 per cent). The largest portion of remittances – about 80% – is realized in euros.
Serbia does not stand out from other countries in terms of the number of foreign remittances it receives. The World Bank’s report for April indicates that that remittances to lesser developed countries are increasing, which is logical, as the number of migrants is growing. Therefore, we cannot conclude that most highly educated people are migrating from their countries.
“There is no basis for the claim that higher educated migrants send more money to their homeland than the lesser educated ones. The latter category is probably sending more money to compensate their families for funding their education. Research shows that the average individual remittance is lower for migrants with higher education, so we cannot claim that the brain drain can be offset by high remittances. However, this does not mean that foreign exchange remittances made by highly qualified and qualified migrants are negligible, especially those who are on temporary work abroad. Research shows that almost half (45 per cent) of Indian doctors working in the United Kingdom are sending part of their earnings to their country of origin, which is on average 16 per cent of their income”, Grečić adds.
“There are many cases of low-skilled workers going abroad to earn savings so that they can open their own business”, Grečić adds.
So, what are those billions that people in Serbia receive actually spent on? Mainly consumption, meaning food, clothes, treatment, buying houses and apartments, renovating the existing ones, buying land, tractors, car…
Experts say that how the remittances are used poses a problem. Grečić says that it is a good thing that remittances contribute to an increase in general population’s spending and reducing the poverty rate, but it is bad that a very small portion of them is spent on investing which only increases the dependence of people living in Serbia on their relatives and friends working abroad. Only a small percentage of remittances is used towards saving and creating new jobs, i.e. opening of small manufacturing businesses.
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