RIYADH: Foreign remittances from Saudi Arabia reached $3.2 billion in June, representing an annual increase of 11.32 percent, according to the latest data from the Central Bank of Saudi Arabia known as SAMA.
This figure emphasizes the important role of the kingdom in global remittance flows and is a testimony to the economic dynamics affecting the region.
The latest SAMA bulletin shows that remittances sent abroad by the Kingdom's nationals have decreased by 1% annually and total 5.12 billion Rials. This follows a peak in May that was the highest recorded in a year and a half.
Saudi Arabia has long been a magnet for expats seeking lucrative job opportunities. With strong economic growth and high salary levels, the kingdom is an attractive destination for professionals from around the world.
The average salary of executives in Saudi Arabia is more than $100,000 per year, which is not only among the highest in the Middle East, but also sets a global benchmark. This competitive compensation is one of the major attractions for expats, helping to drive significant money out of the Kingdom.
The growth of remittances can be attributed to several related factors. The improved labor market in the wake of the COVID-19 pandemic has led to increased job opportunities and thus increased income for immigrants. In addition, the Saudi government's strategies to attract and retain foreign workers, including favorable employment policies and incentives, have further strengthened the migrant workforce.
Technological advances 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 cheaper. With the advent of digital payment systems and mobile apps, migrants can now easily transfer funds, helping to increase the volume of remittances.
The demographic composition of Saudi Arabia provides further grounds for this increase in remittances. Non-Saudis make up 41.6 percent of the Kingdom's population, which is approximately 13.4 million. This diverse immigrant community includes a significant number of 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 a center for international labor.
Saudi Arabia and the UAE are key players in the global remittance landscape. In 2022, the total outflow of remittances from these two countries was about 79 billion dollars. Saudi Arabia alone accounted for $39.3 billion, indicating its significant impact on the economies of remittance-receiving countries. For example, Pakistan and Bangladesh, two of the main recipients of funds from Saudi Arabia, benefit greatly from these financial flows that support families and support economic development.
In Pakistan, Saudi Arabia remains the largest source of remittance inflow. From July 2022 to March 2023, the Kingdom provided 50% of all remittances sent to the country. This is a continuation of a long-standing trend, as Saudi Arabia has historically been the main destination for Pakistani workers. In 2023, nearly 427,000 workers were employed in Saudi Arabia, reflecting the kingdom's continued role as a vital employment hub for expatriates from the South Asian country.
Similarly, Bangladesh has benefited from remittances from Saudi Arabia. Financial support for Bangladeshi immigrants helps improve living standards and economic stability in their country. Remittance-receiving households in Bangladesh use these funds for essential needs such as food, education, and health care, as well as to invest in land and modern farming techniques, thereby boosting economic development.
Globally, the remittance market has shown resilience despite economic uncertainties. During the pandemic, while there were initial fears of a recession, remittances remained relatively stable. India, the largest recipient of global remittances, experienced only a slight decline during the pandemic and rebounded in subsequent years.
It was expected that this country will face a significant decrease of 23% due to the slow economic growth and the drop in oil prices in the host countries. However, it defied expectations and maintained its position as the top recipient, accounting for 12% of global remittances, down just 0.2% in 2020 and growing 8% in 2021.
The flexibility of remittances reflects their vital role in supporting economies and households in low- and middle-income countries.
The broader global trend towards digital and mobile remittances is also notable. According to a February 2024 study by IBS Intelligence, the global digital cross-border transfer market was valued at $148 billion at the beginning of the year. This market is expected to grow at a CAGR of 12.58% and reach approximately $340 billion by 2030. This growth is driven by increased mobile phone usage, online shopping and demand for fast, secure and convenient money transfer services.
In short, the increase in foreign remittances from Saudi Arabia highlights the Kingdom's pivotal role in the global remittance landscape. A combination of high salaries, favorable working conditions, technological advances, and significant immigrant populations contribute to a strong flow of funds to countries around the world. This trend not only reflects the region's economic dynamism, but also underscores the vital support immigrants provide to their families and economies back home.
