RIYADH: Remittances from Saudi Arabian expatriates reached $3.2 billion in June, up 11.32 percent year-on-year, according to the latest data from the Saudi Central Bank (SAMA).
This figure underlines the Kingdom’s significant role in global remittance flows and is evidence of the economic dynamism affecting the region.
The latest SAMA bulletin said remittances sent abroad by the Kingdom's citizens declined by 1 percent year-on-year, totaling SR5.12 billion, following a peak in May that was the highest 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 is an attractive destination for skilled workers from around the world.
The average annual salary of a manager in Saudi Arabia is over US$100,000, making it not only one of the highest salaries in the Middle East, but also setting a global standard. This competitive remuneration is a major draw for expatriates and contributes to the Kingdom's significant remittances.
The increase in remittances is due to several interrelated factors. The recovery of the labor market in the wake of the COVID-19 pandemic has led to more job opportunities and thus higher incomes for expatriates. In addition, the Saudi government's strategies to attract and retain foreign workers, including favorable employment policies and incentives, have further strengthened the number of expatriates.
Technological advances have also played a crucial role in driving this growth. Innovations in financial technology and mobile banking have made sending money abroad faster, safer and less expensive. With the advent of digital payment systems and mobile apps, expatriates can now easily transfer money, contributing to the increasing remittance volumes.
The demographic makeup of Saudi Arabia provides further context for this increase in remittances. Non-Saudis represent 41.6 percent of the Kingdom's population, which is approximately 13.4 million people. 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 rate of an average of 79 people per day reflects the Kingdom's strong economic attractiveness and its role as a hub for international workers.
Saudi Arabia and the United Arab Emirates are major players in the global remittance landscape. In 2022, the combined remittance outflows from these two countries amounted to around $79 billion. Saudi Arabia alone accounted for $39.3 billion, underscoring the significant impact on the economies of remittance-receiving countries. For example, Pakistan and Bangladesh, two of the main recipients of Saudi remittances, benefit enormously from these financial inflows that 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 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 expatriates from the South Asian country.
Bangladesh is also a major recipient of remittances from Saudi Arabia. The financial support provided by Bangladeshis living abroad contributes to improved living standards and economic stability in their home country. Households receiving remittances in Bangladesh use these funds for basic needs such as food, education and healthcare, as well as for investments in land and modern agricultural techniques, thereby promoting economic development.
Globally, the remittance market has proven resilient despite economic uncertainties. While there were initial fears of a downturn during the pandemic, remittances remained relatively stable. India, the largest recipient of global remittances, experienced only a marginal decline during the pandemic and experienced a recovery in the following years.
The country was expected to experience a significant decline of 23 percent due to the economic slowdown and falling oil prices in host countries. However, it defied these expectations and maintained its position as the largest recipient of 12 percent of global remittances, with a decline of only 0.2 percent in 2020 and growth of 8 percent in 2021.
The resilience of remittances underscores their crucial role in supporting economies and households in low- and middle-income countries.
Also noteworthy is the general global trend towards digital and mobile remittances. According to a February 2024 study by IBS Intelligence, the global digital cross-border remittances market was valued at $148 billion at the beginning 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 the increasing use of mobile phones, online shopping and the demand for fast, secure and convenient money transfer services.
In summary, the increase in remittances from expatriates in Saudi Arabia underscores the Kingdom's central role in the global remittance landscape. The combination of high salaries, favorable employment conditions, technological advancements and a sizeable expatriate population contribute to the strong flow of money to countries around the world. This trend not only reflects the region's economic dynamism, but also underscores the important support expatriates provide to their families and economies back home.
