Will the elevated remittance level persist?
The upswing in FY25 is largely attributable to political changes that removed significant buyers of dollars from the hundi market. This suggests that the recent spike may not necessarily be permanent.
Remittances from Bangladeshi migrant workers surged in FY25, with inflows consistently surpassing $2.2 billion per month since August 2024 – a level previously unattainable, even during the pandemic-driven shift to formal channels in FY21. By the end of the year, average monthly flows exceeded $2.5 billion, compared with $2 billion the previous year.
While the surge mirrors the boom seen in FY21, the underlying causes differ notably. The pandemic in FY21 disrupted trade, travel, and the livelihoods of expatriates, as well as migration flows. Informal remittance channels, mainly the hundi market, slowed dramatically as these avenues for transferring money lost functionality. In contrast, the upswing in FY25 is largely attributable to political changes that removed significant buyers of dollars from the hundi market. This suggests that the recent spike may not necessarily be permanent.
Trends in remittance flows
Over the past decade, monthly remittances have evolved from a steady stream into a dependable economic lifeline. Pre-FY21 flows showed incremental growth with seasonal peaks during Eid and in December. The trendline is not only upward but accelerating, reflecting Bangladesh's deepening involvement in the international low-skilled labour market and the increasing steadiness of remittance income for families. Although monthly amounts continue to fluctuate with seasonal events, as the chart shows, both the baseline and peaks of remittance inflows have risen.
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The underlying dynamics of remittance flows have shifted across recent cycles. The surge in mid-2020 was driven by pandemic lockdowns and travel restrictions, which severely limited informal methods such as hand-carried cash, couriers, financing of imports under baggage rules and even hundi. Migrants increasingly relied on digital and bank-based remittance services, resulting in a notable jump in officially recorded remittances. Formal remittances rose from $18.2 billion in FY20 to $24.8 billion in FY21 – a 36% increase.
This exceptional growth proved temporary. Post-pandemic, as global travel and migration resumed, informal channels regained prominence. Formal remittances declined to $21.2 billion in FY22, increasing marginally to $21.6 billion in FY23. Money laundering pressures persisted throughout this period. Inconsistent exchange rate policies and the imposition of rate ceilings in October 2022 pushed remittances away from formal routes. Nevertheless, remittance inflows rebounded to nearly $24 billion in FY24, thanks largely to a rapid recovery in outmigration, driven by booming energy sectors in the GCC – key destinations for Bangladeshi workers.
Labour migration faced challenges, with roughly 360,000 workers returning home between March and December 2020 and new migration nearly halting. Many lost jobs or had to delay migration plans. Monthly departures plunging below 10,000 at times in 2020-2021 driven by border closures and demand collapse. Recovery began in late 2021, accelerating through 2022-2023 as Gulf economies reopened. In 2024, Bangladesh recorded over 1 million migrating workers, a remarkable 84,095 per month, though still 27.4% below the 1.4 million in 2023.
The FY25 remittance boom
In July 2024, curfews and internet shutdowns briefly disrupted formal money transfer corridors. Some migrant workers delayed sending money to show solidarity with the movement. After the fall of the regime, these withheld funds were remitted, partially explaining the spike in August – but not the extended surge that followed.
The subsequent growth was due to a shift towards formal channels. Remittances exceeded an all-time high of $30 billion in FY25. Over the past five Eid holidays, remittances ranged from $1.5 billion (2020) to $2.04 billion (2024). The two Eid holidays in FY25 broke all previous records, indicating a possible structural change.
Remittance totals depend on factors such as the number of overseas workers, their average earnings, savings rates, and the propensity to remit. Earnings and savings rates were stable in FY25. The number of remitters rose by 2.9 million in the post-Covid period leading up to political changes. However, the biggest boost came from an increased propensity to use formal channels, spurred by reduced demand in the hundi market after the departure of major players.
Research suggests that informal flows often comprise 35-75% of official remittance records. The 2024 White Paper estimated illicit flows at $16 billion per year, placing Bangladesh at the higher end. So, the volume released from informal channels was macro-significant. As illicit outflows fell, official remittance inflows rose.
Remittances exceeded an all-time high of $30 billion in FY25. Over the past five Eid holidays, remittances ranged from $1.5 billion (2020) to $2.04 billion (2024). The two Eid holidays in FY25 broke all previous records, indicating a possible structural change.
A $6 billion question
Given that the rerouted funds into official channels due to dismantling of politically protected money laundering networks accounts for the bulk of the $6 billion increase, will it last?
It is important to recognise that from September 2025 onward, remittance growth will be tempered by base effects. The benefits of previously heightened migration stocks will also begin to wane, as the surge in outmigration has already crested. Between July and May 2025, the number of monthly departures fell to 38,247 – a stark contrast to the roughly 84,000 per month recorded in 2024. This decline, driven by political instability that impeded processing and outbound migration despite persistent overseas demand, reveals underlying vulnerabilities in what was once a robust trend.
If future regimes do not maintain strict anti-money laundering enforcement, or if patronage networks are revived, informal remittance routes may quickly re-emerge. The system may currently be at a pause in the ongoing tumults towards a new political normal. While expecting deep, systemic changes strong enough to counter entrenched interests may be optimistic, there is hope that further reforms and greater accountability in political and market governance could prevent a return to the obese levels of illicit outflows seen previously.
Bangladesh's migration intensity
The untapped potential for increasing remittance inflows is considerable, as revealed by a comparison between the remittance productivity of Bangladeshi migrant workers overseas and the economic output of those at home. While GDP per capita offers a benchmark for domestic productivity, understanding the true scale of remittance productivity depends on accurate estimates of the active migrant workforce abroad.
The active labour migrants abroad constituted the equivalent of 11-11.7% of total domestically employed labour force in 2024.
To arrive at this figure, one must look beyond raw deployment numbers and account for those who have returned following contract expiration, deportation, or voluntary repatriation. Drawing on cumulative deployment statistics from BMET and incorporating findings from the World Bank and IOM, it is estimated that approximately 45-50% of Bangladeshi workers deployed abroad return home within three to five years.
As a result, the active population of Bangladeshi labour migrants overseas stands at 7.5 to 8 million individuals out of a total of more than 15.5 million deployed since 1976. This calculation excludes the long-term diaspora, focusing on temporary labour migrants whose presence is concentrated in destinations such as Saudi Arabia, the UAE, Malaysia, and other GCC nations. The active labour migrants abroad constituted the equivalent of 11-11.7% of total domestically employed labour force in 2024.
Few large economies export labour at this intensity. It places Bangladesh in a high-exposure category, similar to the Philippines but with less diversification in migrant destinations and skill profiles. Only Nepal (25-30%) is higher migration intensity than Bangladesh in South Asia with similar low skilled concentration.
A high value export
Yet, Bangladesh's labour exports yield higher per capita returns than domestic labour productivity. The FY25 remittances translate into an average of $3,790 to $4,043 per migrant worker – notably 46-56% higher than the nation's GDP per capita, which stands at $2,593.4 and 126-241% higher than the $1,674 agricultural GDP per worker for the same year.
This exceptional productivity places Bangladesh among a select cohort of high-remittance nations – such as Nepal, Kyrgyzstan, Tajikistan, Haiti, and Lesotho – where the average remittance per worker routinely surpasses total GDP per capita and agricultural GDP per worker. Bangladesh distinguishes itself further due to its scale and the latent potential for reform, setting a benchmark in the global labour-export landscape.
Labour migration serves not just as a safety net for families, but as one of Bangladesh's most lucrative exports, outpacing domestic labour productivity outside manufacturing. Labour diplomacy must therefore be regarded as a high return strategic investment.
The FY25 remittances translate into an average of $3,790 to $4,043 per migrant worker – notably 46-56% higher than the nation's GDP per capita, which stands at $2,593.4 and 126-241% higher than the $1,674 agricultural GDP per worker for the same year.
Forging robust bilateral labour agreements, broadening skill accreditation, stimulating foreign direct investment in vocational training, reducing the multifarious cost of migration, and deploying specialised labour attachés can open doors to greater employment quotas, higher earnings/worker, and improved protections for workers overseas. Bangladesh can then continue to harness the full force of its labour export, elevating both individual livelihoods and the nation's economic standing.
Zahid Hussain is a former lead economist of the World Bank Dhaka office.
