According to the Bank of Spain, the country received 5.9 billion euros ($7.6 billion) in remittances in 2012, a 3.6 percent increase from 2011 and a record for the Iberian nation. Also in 2012, the number of Spanish citizens living abroad reached 1.9 million, up 6 percent from a year earlier. This increase can be attributed in part to foreigners who obtained Spanish nationality while residing in the country and have since returned to their places of origin. In 2012, the population of foreigners in Spain fell for the first time since 1996. Meanwhile, the outflow of remittances from foreigners residing in Spain reached 6.4 billion euros in 2012, considerably below the peak of 8.4 billion euros registered in 2006.
Portuguese citizens living abroad sent 2.45 billion euros in remittances in 2012, up from 2.42 billion euros in 2010, according to the Bank of Portugal. Remittances sent from Portugal fell to 528 million euros in 2012, down from 585 million euros in 2011. Some 200,000 people left Portugal — a country of 10 million people — between 2011 and 2012.
The World Bank estimates that Irish citizens living abroad sent 570 million euros home in 2012, up from 450 million euros in 2007. Foreign workers living in Ireland sent almost 1.8 billion euros home in 2011, down from the 2 billion euro peak reached in 2008. Ireland saw 87,100 people leave from January to April 2012, an increase from 80,600 in the same period the previous year (Ireland's population is 4.5 million.) The number of immigrants fell to 52,700 from 53,300 over the same period. Irish nationals currently account for half the people leaving the country each year.
Effects of Migration and Remittances Flows
Remittances do not solve the periphery's deepening social crisis, but they act as safety nets for a growing number of families. These payments support national household consumption and represent a growing source of foreign exchange. During the early stages of the crisis, informal economic activity and reliance by young people on their parents' and grandparents' savings and pensions offered families some relief. As emigration from the periphery grows, remittances provide an additional option for families trying to cope with the periphery's unemployment crisis.
This echoes a similar phenomenon that took place between the second half of the 19th century and the first half of the 20th century, when people in the European periphery left their countries en masse to seek job opportunities abroad. During that period, remittances became an important source of income for family members who stayed home.
But the economic impact of remittances is still relatively low. They account for less than 1 percent of gross domestic product in Spain and Ireland, though they do represent some 2 percent of Portuguese GDP. Portugal therefore depends in more substantial measure on the economic conditions in countries with a large number of Portuguese immigrants, such as the United Kingdom, Spain, France and, more recently, former Portuguese colonies Brazil and Angola. Remittances still play an even greater role in some non-eurozone countries. In Lithuania, for instance, remittances account for 5 percent of GDP, and in Bulgaria, that proportion stands at 3 percent.
The crisis in the eurozone periphery is also affecting the flow of remittances to other parts of Europe and the world. According to the Bank of Spain, remittances to Romania and Morocco — two of the most frequent countries of origin of immigrants in Spain — fell by 5 percent year-on-year in the fourth quarter of 2012. Remittances account for roughly 2 percent of Romania's GDP and 7 percent of Morocco's GDP, making both countries highly sensitive to the impacts of the European crisis.
Remittances from Polish workers living in Ireland — there are approximately 100,000 Poles of working age in the country — are also affected by the crisis. Such remittances fell to 670 million euros in 2010, down from their peak at 1.2 billion euros in 2008. Remittances account for roughly 1.5 percent of Polish GDP, making Poland one of the top receiving countries in the European Union.
High emigration rates pose economic and social threats to the eurozone periphery in the long term. These include a potential brain drain — as some of the emigrants are highly qualified — and a reduction of the tax base. Moreover, emigration can worsen the already serious problems that aging and shrinking populations pose to most European countries. In the short term, however, high emigration rates leave a smaller pool of potential candidates for unemployment benefits, and they bring an increased flow of money from abroad in the form of remittances.
