Personal transfers account for significant slice of Latvian GDP

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In 2020, Croatia, Latvia and Romania recorded the largest surpluses in the EU of personal transfers that contribute to national GDP according to figures published by Eurostat December 14.

While personal transfers (i.e. transfers sent by migrants to their home economies) generally show net outflows in the EU (more outflows than inflows), compensation of employees (i.e. wages earned by employees who work in other countries on short-term work contracts, as seasonal workers or cross border commuters) show net inflows (more inflows than outflows).

As far as Latvia is concerned, in 2020 personal remittances heading out of the country (154 million euros) were dwarfed by the money heading in the opposite direction (954 million euros).

Inbound personal remittances, 2020
Inbound personal remittances, 2020

Dependency rates on international remittances are measured by the share of inflows in personal remittances in percentage of the respective country's GDP. According to this, the highest dependency rates on remittances in the EU are observed in Croatia (7.3 % of GDP), Latvia (3.2 % of GDP) and Romania (3.1 % of GDP) in 2020, while the least dependent economies in the EU are Ireland (0.1 % of GDP), Greece, Finland and the Netherlands (each 0.3 % of GDP).

About 53 % of total flows in personal remittances in 2020, as in the previous years, took place within EU Member States, i.e. EU residents predominantly (but not exclusively) remit among themselves. This does not come as a surprise given that EU citizens are allowed to move freely within the EU labour market.

There are, however, considerable disparities between the EU Member States in regard to their relative exposure to the rest of the world: in countries like Poland (98 %), Spain (93 %), Greece (91 %), Lithuania (84 %) and Italy (82 %) personal remittance outflows went predominantly to economies outside the EU, while Ireland (93 %), Italy (80 %), and Lithuania (76 %) received their inflows mostly from outside the EU.

The most EU-centered economies in regard to international remittances were Luxembourg that recorded only 0.6 % of its total outflows beyond the EU, and Slovenia only 6.8 % of its total inflows from outside the EU.

The full data can be examined at the Eurostat website.


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