RIYADH: 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 Saudi Central Bank, also known as SAMA.
This figure underscores the kingdom's significant role in global remittance flows and is evidence of the economic dynamism affecting the region.
SAMA's latest bulletin said remittances sent abroad by the Kingdom's nationals decreased by 1 percent annually, totaling SR5.12 billion. This is followed by the peak in May, which was the highest value recorded in a year and a half.
Saudi Arabia has long been a magnet for expats looking for lucrative job opportunities. With its strong economic growth and high salaries, the kingdom offers an attractive destination for professionals from all over the world.
The average salary of executives in Saudi Arabia exceeds $100,000 per year, which is not only one of the highest in the Middle East, but also sets a global benchmark. This competitive compensation is a major attraction for emigrants and contributes to a substantial outflow of funds from the kingdom.
The growth in remittances can be attributed to several interrelated factors. The recovery in the labor market due to the COVID-19 pandemic has led to increased job opportunities and consequently higher earnings 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 foreign workforce.
Technological advances have also played a key 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, foreigners can now easily transfer funds, contributing to the growing volume of remittances.
The demographic makeup of Saudi Arabia provides further context for this surge in remittances. Non-Saudi Arabs represent 41.6 percent of the Kingdom's population, representing approximately 13.4 million individuals. This diverse expatriate community includes significant numbers of people 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, an average of 79 persons per day, reflects the kingdom's strong economic appeal and its role as a center for the international workforce.
Saudi Arabia and the United Arab Emirates are key players in the global remittance landscape. In 2022, the combined remittance outflow from the two countries was approximately US$79 billion. Saudi Arabia alone accounted for $39.3 billion, highlighting its significant impact on the economies of countries receiving remittances. 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 remittance inflows. From July 2022 to March 2023, the kingdom contributed 50 percent of total remittances to the country. This is a continuation of a long-term trend, as Saudi Arabia has historically been a major destination for Pakistani workers. In 2023, almost 427,000 workers were employed in Saudi Arabia, reflecting the kingdom's continued role as a vital job center for expatriates from the South Asian country.
Similarly, Bangladesh has been a significant recipient of remittances from Saudi Arabia. Financial support from Bangladeshi expatriates contributes to the improvement of 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 health care, as well as for investments in land and modern agricultural techniques, thereby supporting economic development.
Globally, the money transfer market has proven resilient despite economic uncertainties. During the pandemic, although there were initial fears of a decline, remittances remained relatively stable. India, a major recipient of global remittances, saw only a small decline during the pandemic and has seen a recovery in subsequent years.
The country was expected to face a significant decline of 23 percent due to economic slowdown and drop in oil prices in host countries. However, it defied these expectations and maintained its position as the main 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 highlights their crucial role in supporting economies and households in low- and middle-income countries.
Also notable is the broader global trend towards digital and mobile transfers. According to a February 2024 IBS Intelligence study, the global market for digital cross-border transfers was valued at $148 billion at the start of the year. This market is projected to grow at a compound annual growth rate of 12.58 percent to 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 summary, the increase in remittances from Saudi Arabia abroad highlights the key role of the Kingdom in the global remittance environment. The combination of high salaries, favorable working conditions, technological progress and a significant number of expatriates contributes to a massive flow of funds to countries around the world. This trend not only reflects the region's economic dynamism, but also underscores the vital support that expatriates provide to their families and economies back home.
