RIYADH: The value of remittances from expatriates in Saudi Arabia stood at $3.2 billion in June, reflecting an 11.32 percent year-on-year increase, according to the latest data from the Saudi Central Bank, also known as SAMA.
The figures underline the Kingdom’s pivotal role in global remittance flows and are a testament to the economic dynamism that is influencing the region.
According to the latest SAMA report, remittances sent abroad by Saudi citizens fell by 1 percent year-on-year to 5.12 billion riyals, the highest level in a year and a half since May.
Saudi Arabia has long been a magnet for expatriates looking for good jobs. With its strong economic growth and high salary levels, it is an attractive destination for professionals from around the world.
The average salary for senior executives in Saudi Arabia is over $100,000 per year, which is not only the highest in the Middle East but also a global benchmark. This competitive compensation is a major attraction for expatriates, resulting in a large amount of remittances from Saudi Arabia.
The growth in remittances is due to a number of interrelated factors. The recovery in the labor market due to the COVID-19 pandemic has created more employment opportunities and, consequently, higher incomes for migrant workers. In addition, the Saudi government's strategy to attract and retain migrant workers, including favorable employment policies and incentives, has also helped to support the increase in migrant workers.
Technological advancements have also played a major role in facilitating this growth. Innovations in financial technology and mobile banking have made sending money abroad faster, safer, and more affordable. With the advent of digital payment systems and mobile apps, people living abroad have been able to easily transfer money, leading to an increase in the volume of money transfers.
The demographic makeup of Saudi Arabia provides additional context for this increase in remittances. Non-Saudis make up 41.6 percent of Saudi Arabia's population, which is approximately 13.4 million people. This diverse migrant community includes significant numbers from countries such as Bangladesh, India, Pakistan, Yemen, and Egypt. Other countries contributing to the migrant population include Sudan, the Philippines, Syria, Nepal, and Jordan.
The high net migration rate, averaging 79 people per day, reflects the Kingdom's strong economic attractiveness and its role as an international labour hub.
Saudi Arabia and the UAE are major players in the global remittance landscape. In 2022, remittances from the two countries combined totaled approximately $79 billion, with Saudi Arabia alone accounting for $39.3 billion, demonstrating a significant impact on the economies of recipient countries. For example, Pakistan and Bangladesh, two of the primary recipients of Saudi remittances, have benefited greatly from these inflows, supporting households and driving economic development.
In Pakistan, Saudi Arabia remains the largest source of remittances, with 50 percent of all remittances received from July 2022 to March 2023, continuing a long-standing trend as the kingdom has consistently been a major destination for Pakistani workers. In 2023, nearly 427,000 workers were employed in Saudi Arabia, reflecting the kingdom’s continued role as a major employment hub for migrant workers from the South Asian country.
Similarly, Bangladesh has also benefited greatly from remittances from Saudi Arabia. Financial support from Bangladeshis living abroad has helped improve living standards and economic stability in their home countries. Remittance recipient households in Bangladesh use these funds for basic needs such as food, education, and healthcare, as well as investing in land and modern farming techniques, leading to improved economic development.
The global remittance market has shown resilience despite economic uncertainty. During the pandemic, despite initial fears of a recession, remittances remained relatively steady. India, the world's top remittance recipient, experienced only a small decline during the pandemic and saw a recovery in the following years.
The country was expected to experience a significant decline of 23 percent due to the slowdown in the economy and lower oil prices in the host country. However, it defied these expectations, remaining the top recipient of remittances, accounting for 12 percent of all remittances worldwide, decreasing by only 0.2 percent in 2020 and growing by 8 percent in 2021.
The resilience of remittances highlights the important role of remittances in supporting economies and households in low- and middle-income countries.
The broader global trend towards digital and mobile remittances is also interesting. According to a February 2024 study by IBS Intelligence, the global digital cross-border remittances market was valued at $148 billion at the start of the year. This market is expected to grow at a compound annual growth rate of 12.58 percent and reach an estimated value of $340 billion by 2030. This growth is being driven by increased mobile phone usage, online shopping and the demand for fast, secure and convenient money transfer services.
In summary, the increase in remittances from Saudi Arabia by expatriates underscores the important role Saudi Arabia plays in the global remittance landscape. High salaries, favourable employment conditions, technological advancements, and a large expatriate population have led to strong inflows to countries around the world. This trend not only reflects the economic dynamism of the region, but also highlights the significant contribution expatriates make to their families and home economies.
