Immigration in the aftermath of COVID-19
Kim Catechis and Matthew Davison, Senior Research Analyst, Martin Currie Australia discuss the impact of COVID-19 border lockdowns on parts of the economy reliant on immigration and overseas payments & remittances.
It’s flowing through to a lot of higher-order industries as well, and universities are good example, particularly here in Australia, that have been heavily affected
Kim: Hello again, and welcome to another edition of the AFTERMATH. Today, we are looking at the question of migration and remittances around the world. And with me, to help me parse through this, I have Matt Davison from our Melbourne office. Matt, really good to see you.
Matt: Hi Kim, really good to speak with you too.
Kim: Matt, you know we are looking at a world that’s basically splintering economically, diplomatically. The consensus that we are used to is gone, and you know in the research for the AFTERMATH we’ve discovered that remittances represent significant economic importance for a bunch of countries, even those that you might consider to be kind of middle income countries, and obviously supporting not only the people but obviously businesses as well. So, how do you see this?
Matt: Yeah absolutely Kim, the splintering is certainly a risk going forward, I think the workers will probably continue to flow in the future as the demand is there, and that will be a temporary setback for some of the poorer countries. But when you think more broadly, it’s not just about manual labour, is it, it’s got the potential to extend a lot further into the different payments areas and different parts of the economy that are really dependent on migration at a higher level.
Kim: Yeah, and I guess it’s not just the workers Matt, right, because there’s all these middle class students from all around the world, they travel to places like Australia, the UK, the US etc to do their degrees. A lot of that has probably stopped short term, turned online because of COVID-19, but it may not even return given, especially the fractures in diplomatic relations between China and maybe Australia and the US etc. What’s your take on that one?
Matt: Absolutely Kim, it’s flowing through to a lot of higher-order industries as well, and universities are really good example, particularly here in Australia it’s been heavily affected.
I think also when you take a step back and think about the repercussions more broadly, there is lots of subsectors that will be impacted, payments companies that operate in particular niches, or corridors, could be hurt.
Then when you think about the migration changes, certain countries get their GDP model effected, but other countries may have their housing markets quite disrupted by that as well.
Then maybe when we think back to payments, clearly digital delivery has had a massive boost through all this and that’s going to mean that certain platforms and certain payment rails are going to gain more support going forward. And I guess we can ask the question, is your payments business looking more to e-commerce than travel? You’d be doing a lot better at the current point in time.
Going forward when we think about the acceleration in the digital delivery of remittances and other payments methods, which banks and which telcos are really partnering with the companies that are moving digital.
Kim: Yeah, that’s a really good point and now you’re talking digital, you know I guess, the fourth revolution, the industrial revolution etc., is all going to be based on digital cloud and 5G. And obviously that is a subject for a different call, but basically, it’s another area where the world is splitting into two. So my base case is now that you end up with basically two spheres of economical influence, and you got China belt and road, infrastructure companies, the US and western markets. What’s your take for investors here?
Matt: Yeah it’s a really interesting point, maybe the situation doesn’t deteriorate quite so dramatically, but certainly something we have to watch out for in the policy direction and something to think about going forward.
Presently you’re really seeing this battle in payments for the, I guess the online checkout part, maybe we need to think about that more in terms of the different spheres of influence around the world and how the payments companies are really integrating into that.
I think also there are other areas like business to business and how that gets disrupted, whether from a payments perspective or a broader commerce perspective as well. Everyone is looking to solve pain points at the moment but does this create some prolonging off the existing pain points as well?
Kim: That’s a really good point. Matt this has been really helpful, thanks very much for your time.
Thank you for your time, tuning in and please come back next week, we will have something again, completely different.
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