Overseas remittances to HCM City in the first four months of the year are estimated to be US$1.8 billion, a year-on-year decrease of 2 per cent, according to the State Bank of Vietnam.

This is the first decline in many years, it said.

Nguyen Hoang Minh, deputy director of the central bank’s HCM City office, said remittances to the city this year are forecast to be lower than last year due to the COVID-19 pandemic.

Some money transfer companies said remittances from abroad declined in the last two months, with some reporting declines of 50 per cent.

According to DongA Money Transfer Co., Ltd, inbound remittances in the first 22 days of April were down by half month-on-month.

Remittances from Europe were down the most, followed by the US, Canada, Australia and Viet Nam’s key labour markets such as South Korea, Taiwan, and Japan.

Key countries for remittances to Viet Nam such as the US, UK and Canada have been hit hard by the pandemic, and ethnic Vietnamese there, like many others, have lost jobs, leading to reduced remittances to their families.

The companies forecast remittances to further fall in the second quarter and said last year’s figure could not be reached if the pandemic prolongs.

Can Van Luc, chief economist at State-owned bank BIDV, said inflows this year could decrease by 10-15 per cent, and even 15-17 per cent in the worst case.

According to the World Bank, global remittances will decline by 20 per cent this year due to the economic crisis caused by the pandemic.

Remittances to low- and middle-income countries are projected to fall by 19.7 per cent to $445 billion.

Viet Nam ranks among the top 10 countries in the world in terms of remittances. They were worth $16.7 billion last year, with HCM City accounting for $5.3 billion

The majority of the money is converted into dong and deposited in banks or invested in business.

Dr Huynh Trung Minh, a financial expert, said, "The decrease in remittances will affect the supply of foreign currencies but not have a big impact on the exchange rate since supply and demand of foreign currencies remain steady.

“Viet Nam's foreign exchange reserves, ... of around $84 billion, are sufficient to stabilise the foreign exchange market in case of fluctuations."

In 2021 the World Bank expects remittances to LMICs to recover and rise by 5.6 per cent to $470 billion. — VNS