RIYADH: Foreign remittances from Saudi Arabia reached $3.2 billion in June, reflecting a year-on-year growth of 11.32 percent, according to the latest data from the Saudi Central Bank, also known as SAMA.
This figure highlights the Kingdom's significant role in global remittance flows and is a testament to the economic dynamics affecting the region.
SAMA's latest bulletin showed that remittances sent abroad by the Kingdom's citizens declined by 1 percent annually to SR5.12 billion. This followed a peak in May, which was the highest value recorded in a year and a half.
Saudi Arabia has long been a magnet for expatriates seeking gainful employment. With its strong economic growth and high salary levels, the Kingdom offers an attractive destination for professionals from around the world.
The average executive salary in Saudi Arabia exceeds $100,000 per year, which is not only one of the highest in the Middle East, but also a global benchmark. This competitive compensation is a big draw for expatriates, contributing to the Kingdom's significant remittance outflow.
The growth in remittances can be attributed to several interrelated factors. The recovery of the labor market after the COVID-19 pandemic has led to increased employment opportunities and, as a result, higher wages 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 overseas 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 less expensive. With the advent of digital payment systems and mobile apps, expats can now transfer funds with ease, helping to increase the volume of remittances.
Saudi Arabia's demographics provide additional context for this surge in remittances. Non-Saudis make up 41.6 percent of the Kingdom's population, which is approximately 13.4 million people. This diverse expat community includes significant numbers from countries such as Bangladesh, India, Pakistan, Yemen and Egypt. Other countries that favor expatriates include Sudan, the Philippines, Syria, Nepal and Jordan,
The high level of net migration, averaging 79 people per day, reflects the Kingdom's strong economic attractiveness and its role as an international labor force hub.
Saudi Arabia and the UAE are key players in the global remittance landscape. In 2022, the total outflow of remittances from these two countries was about 79 billion dollars. Saudi Arabia alone accounted for $39.3 billion, indicating its significant influence 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 stimulate economic development.
In Pakistan, Saudi Arabia remains the largest source of remittance inflow. From July 2022 to March 2023, the Kingdom made 50 percent of the total volume of 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, almost 427,000 workers were employed in Saudi Arabia, indicating the Kingdom's continued role as a vital employment hub for expatriates from the South Asian country.
Similarly, Bangladesh has been a significant beneficiary of remittances from Saudi Arabia. Financial support for Bangladeshi expatriates contributes to the improvement of living standards and economic stability in their home country. Bangladeshi households that receive remittances use the funds for basic needs such as food, education and health care, as well as to invest in land and modern farming techniques, thereby contributing to economic development.
The global remittance market has shown resilience despite economic uncertainty. During the pandemic, although there were initial fears of a downturn, remittances remained relatively stable. India, the world's top recipient of remittances, experienced only a slight decline during the pandemic and has seen a rebound in subsequent years.
The country was expected to face a significant decline of 23 percent due to the economic downturn and falling oil prices in host countries. However, it met those expectations by maintaining its position as the top recipient, accounting for 12 percent of global remittances, with a decline of just 0.2 percent in 2020 and an 8 percent increase in 2021.
The sustainability of remittances underscores their important role in supporting economies and households in low- and middle-income countries.
The broader global trend towards digital and mobile money transfers is also noteworthy. According to IBS Intelligence research conducted in February 2024, the global digital cross-border transmission market was valued at $148 billion at the beginning of the year. This market is projected to grow at a compound annual growth rate of 12.58 percent, reaching 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 underscores the Kingdom's key role in the global remittance landscape. The combination of high wages, favorable employment conditions, technological advances and a significant number of expatriates contributes to a strong flow of funds to countries around the world. This trend not only reflects the economic dynamics of the region, but also highlights the vital support that expats provide to their families and the economy back home.
