Dubai: Remittances from the UAE and around the world to India, Philippines and other countries will continue to grow this year but not at the same pace as the previous years.
The number of expatriates working overseas is still growing and migrants are still sending a portion of their incomes to their home countries, but some exchange houses said they are already seeing a slowdown in money flows during the first three months of the year.
The World Bank has forecast that remittances to the developing world will reach only $440 billion this year, an increase of 0.9 per cent over the previous year, which is the slowest since the global financial crisis in 2008-2009.
The slowdown will be due to weak economic growth in Europe, deterioration of the Russian economy, depreciation of the euro and ruble and decline of oil prices. Remittance flows to countries in East Asia and Pacific region, in particular, will increase by just 2.8 per cent this year, a marginal growth compared to the previous years.
"The moderation in the growth of remittances will be hard on many poor people. The affected countries may have to consider creative ways of smoothing the shock," said Dilip Ratha, lead economist, migration and remittances, at the World Bank's Development Prospects Groups and head of the Global Knowledge Partnership on MIgration and Development.
Sudhesh Giriyan, COO of Xpress Money, said the remittance growth from the UAE has already slowed down, but he pointed out that there has been no de-growth.
"Looking at the World Bank's assessment on a slowdown in remittances because of the lack of major investments in the last one year, from the time oil prices started declining, we do agree that the remittance growth has also slowed. We may not see the same growth as compared to previous years, but we see a marginal growth," Giriyan told Gulf News.
Other money transfer operators, however, maintained that remittances from the UAE remain unaffected.
Ashwin Shetty, senior vice president for treasury operations at UAE Exchange, said they saw a 10 to 13 per cent increase in outbound remittances in the UAE during the first quarter of the year.
"Weak economic growth and fall in the euro and ruble has certainly affected the European economies and remittances from Europe to other countries will be affected and there will be a fall. In the case of the UAE or largely GCC, the oil price plunge may not affect remittances to Asian corridors," said Shetty.
"The remittance industry in the UAE is not dependent only on oil prices but on the versatile business models that drive the economy. Some key investments in Abu Dhabi will add to the momentum of growth."
"There may have been variations in remittances to Asia, largely based on the Indian rupee fluctuations," he added.
Giriyan also pointed out that the UAE is now the third-largest source of remittances after United States and Saudi Arabia, and still enjoys huge financial surpluses which were amassed over the past years when oil prices were still rising.
"The apprehension may be, that these surplus funds will deplete ove rthe years and if the low oil prices continue, investments in new projects could suffer, which will curb the job market that will have a direct impact on migration and remittances," said Giriyan.