Dubai: One of the reasons people move abroad is because they have a number of family dependents, particularly those living in the developing countries, to support. Working overseas is often synonymous with greener pastures or higher incomes. But the recent decline in oil prices is reportedly taking their toll on the earnings of these expatriate breadwinners.
The World Bank’s latest edition of the Migration and Development Brief, released in April, said that total money flows to the developing countries posted only a “marginal” growth in 2015. The World Bank attributed this to weak oil prices straining the earnings of expatriate workers and their “ability to send money home to their families”.
The officially recorded money transfers to developing countries amounted to $431.6 billion in 2015, an increase of 0.4 per cent over $430 billion in 2014. Funds sent to major recipients like India and Egypt posted a decline, while money flows to Europe and Central Asia region dropped by 20 per cent.
“The growth pace in 2015 was the slowest since the global financial crisis,” the World Bank said in a press statement. “The slowing in remittances growth, which began in 2012, was exacerbated last year by low oil prices, which are taking a toll on many oil-exporting remittance-source countries, such as Russia and the Gulf Cooperation Council (GCC) states.”
"Many remittance-receiving countries, including India, the world's largest remittance recipient, and Egypt saw remittances contract in 2015, as flows from the GCC countries slowed considerably."
If the trend continues, many families in the developing world are going to feel serious financial impact. "If remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges, including nutrition, access to health care and education," said Augusto Lopez-Claros, director of the World Bank's Global Indicators Group.
The World Bank did not specify if the outgoing remittance flows from the UAE have posted a slowdown as well, but money transfer operators in the country reported that their remittance business has improved, thanks to favourable exchange rates and growing expatriate population in the country.
“People continue to remit money,” said Sultan Al Mahmoud, chief marketing and support services officer of Wall Street Exchange. The company reported that their remittance business grew by 10 per cent in 2015 compared to a year earlier.
“One of the primary reasons for growth in remittance is the increase in the number of expatriates sending money to their respective home countries,” said Al Mahmoud.
“The weakening of various currencies against the US dollar encouraged more expatriates to remit money. Few currencies reached their lowest level, benefiting the expats by getting higher exchange rate,” he added.
Wall Street’s top five remitters are expatriates from India, Bangladesh, Philippines, Pakistan and Sri Lanka. Funds remitted from the UAE are believed to be the lifeline of many families based in the Asian region.
According to the World Bank Group’s Migration and Remittances Fact book 2016, the number one beneficiary of global remittances is India, which cornered $72.2 billion of the remitted funds in 2015, followed by China ($63.9 billion) and the Philippines ($29.7 billion). Pakistan came eighth on the list, accounting for $20.1 billion of the remittances, while Bangladesh emerged as the tenth biggest remittance recipient, with $15.8 billion.
Promoth Manghat, CEO of UAE Exchange, maintained that the various government initiatives, such as the Expo 2020 in Dubai and FIFA World Cup in Qatar, have contributed to the continued growth in outgoing remittances.
“Despite economic pressures, remittance outflows from oil-exporting GCC countries continued to rise in 2015 due to maintenance of fiscal spending, and the peg to a strong US dollar by most economies in the GCC.”
Manghat said they’ve seen a rise in their remittance transactions to Egypt and Jordan by 14.4 per cent and 13.5 per cent, respectively in the first quarter of the year compared to the same period in 2015. “It’s worth noting that Egypt receives three times the revenue generated by the Suez Canal from global inward remittances,” said Manghat.
In 2015, UAE Exchange processed $27.5 billion in remittances through its branches around the world, accounting for 6 per cent of the entire money transfer market.
