RIYADH: Outbound remittances from Saudi Arabia reached $3.2 billion in June, reflecting an annual increase of 11.32 percent, according to the latest data from the Central Bank of Saudi Arabia, also known as SAMA.
This figure underlines the Kingdom's significant role in global remittance flows and is a testament to the economic dynamism affecting the region.
The latest SAMA bulletin indicated that remittances sent abroad by the Kingdom's citizens declined by 1 percent annually, to a total of SR5.12 billion. This follows a peak in May, which was the highest value recorded in a year and a half.
Saudi Arabia has long been a magnet for foreigners seeking lucrative job opportunities. With its robust economic growth and high salary levels, the Kingdom offers an attractive destination for professionals from all over the world.
The average CEO salary in Saudi Arabia exceeds $100,000 annually, which is not only among the highest in the Middle East but also sets a global benchmark. This competitive remuneration is a major draw for expatriates, and contributes to the Kingdom's significant remittance outflows.
The increase in remittances can be attributed to several interrelated factors. The recovery in the labor market in the wake of the covid-19 pandemic has led to increased employment opportunities and consequently higher incomes for expatriates. In addition, the Saudi government's strategies to attract and retain foreign labor, including favorable employment policies and incentives, have further strengthened the foreign labor force.
Technological advancements have also played a critical 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, expatriates can now transfer money with ease, contributing to the increasing volume of remittances.
The demographic makeup of Saudi Arabia provides additional context for this increase in remittances. Non-Saudis represent 41.6 percent of the Kingdom's population, which equates to approximately 13.4 million individuals. This diverse expatriate community includes significant numbers from countries such as Bangladesh, India, Pakistan, Yemen and Egypt. Other countries contributing to the expatriate population include Sudan, the Philippines, Syria, Nepal and Jordan,
The high net migration, with an average of 79 individuals per day, reflects the Kingdom's strong economic attractiveness and its role as a hub for international labor.
Saudi Arabia and the United Arab Emirates are key players in the global remittance landscape. By 2022, the combined remittance outflows from these two countries amounted to approximately $79 billion. Saudi Arabia alone accounted for $39.3 billion, highlighting its significant impact on the economies of recipient countries. For example, Pakistan and Bangladesh, two of the primary recipients of Saudi remittances, benefit immensely from these financial inflows, which support households and drive economic development.
In Pakistan, Saudi Arabia remains the largest source of remittances. From July 2022 to March 2023, the Kingdom contributed 50 percent of total remittances to the country. This is a continuation of a long-standing trend, as Saudi Arabia has historically been an important destination for Pakistani workers. By 2023, nearly 427,000 workers were employed in Saudi Arabia, reflecting the kingdom's ongoing role as a major employment hub for expatriates from the South Asian country.
Similarly, Bangladesh has been a significant recipient of remittances from Saudi Arabia. The financial support provided by expatriates from Bangladesh contributes to improved living standards and economic stability in their home countries. Remittance-receiving households in Bangladesh use these funds for essential needs such as food, education and health care, as well as for investment in land and modern agricultural techniques, promoting economic development.
Globally, the remittance market has shown resilience despite economic uncertainty. During the pandemic, while there were initial fears of a downturn, transfers remained relatively stable. India, the largest recipient of global remittances, experienced only a minor decline during the pandemic and saw a recovery in subsequent years.
The country was expected to face a significant decline of 23 percent due to economic downturns and falling oil prices in host countries. However, it defied these expectations and maintained its position as the top recipient, accounting for 12 percent of global remittances, with only a 0.2 percent decline in 2020 and 8 percent growth in 2021.
The resilience of remittances underscores their critical role in supporting economies and households in low- and middle-income countries.
The broader global trend towards digital and mobile remittances is also noteworthy. According to a February 2024 study by IBS Intelligence, the global market for digital cross-border transfers 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 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 conclusion, the increase in remittances from Saudi Arabia highlights the Kingdom's crucial role in the global remittance landscape. The combination of high wages, favorable employment conditions, technological advances and a significant expatriate population contribute to the robust flow of funds to countries around the world. This trend not only reflects the economic dynamism of the region, but also highlights the important support that expatriates provide to their families and economy back home.
