RIYADH: According to the latest data from the Saudi Central Bank, foreign remittances from Saudi Arabia reached $3.2 billion in June, an increase of 11.32 percent year-on-year.
This figure underscores the important role of the state in global remittance flows and is a testament to the economic dynamics influencing the region.
The latest SAMA bulletin showed remittances sent abroad by the state's citizens fell by 1 percent year-on-year, totaling SR5.12 billion. This follows May's peak, which was the highest value recorded in over a year and a half.
Saudi Arabia has long been a magnet for expatriates seeking lucrative job opportunities. With its strong economic growth and high salary levels, the state offers an attractive destination for professionals from around the world.
The average executive salary in Saudi Arabia is more than $100,000 annually, which is not only the highest in the Middle East but also sets a global benchmark. This competitive compensation is a major attraction for migrants, contributing to the state's substantial remittance outflows.
The growth of remittances can be attributed to several interrelated factors. The recovery of the job market due to the COVID-19 pandemic has increased job opportunities and, consequently, increased foreign employment. In addition, the Saudi government's strategies to attract and retain foreign workers, including favorable employment policies and incentives, have strengthened the expatriate workforce.
Technological development has also played an important role in facilitating this development. 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 funds, which can contribute to increased remittances.
Saudi Arabia's demographic structure provides further context for this increase in remittances. Non-Saudis represent 41.6 percent of the Kingdom's population, amounting to about 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 migrant population are Sudan, Philippines, Syria, Nepal and Jordan,
The high net migration rate, averaging 79 people per day, reflects the state's strong economic appeal and its role as a hub for international labor.
Saudi Arabia and the UAE are major players in the global remittance scenario. The total remittance outflow from these two countries in 2022 was about $79 billion. Saudi Arabia alone accounts for $39.3 billion, highlighting its significant impact on the economies of remittance-receiving countries. For example, Pakistan and Bangladesh, the two primary recipients of Saudi remittances, benefit greatly from these financial flows, which support households and drive economic growth.
In Pakistan, Saudi Arabia is the largest source of remittance flows. From July 2022 to March 2023, the state contributed 50 percent of the 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, approximately 427,000 workers were employed in Saudi Arabia, reflecting the kingdom's ongoing role as an important employment center for expatriates from South Asian countries.
Similarly, Bangladesh has benefited significantly from remittances from Saudi Arabia. The financial support of Bangladeshi expatriates contributes to improved living standards and economic stability in their home countries. Households receiving remittances in Bangladesh use these funds to meet essential needs such as food, education and health care, as well as to invest in land and modern farming techniques, which boost economic growth.
Globally, the remittance market has shown resilience despite economic uncertainty. During the pandemic, despite initial fears of a recession, remittances remained relatively stable. India, the top recipient of global remittances, experienced only a small decline during the pandemic and saw a recovery in subsequent years.
The country was expected to face a significant decline of 23 percent due to the economic slowdown and the drop in oil prices in the host countries. However, it defied these expectations, maintaining its position as the top recipient, accounting for 12 percent of global remittances, a decline of only 0.2 percent in 2020 and an 8 percent increase in 2021.
The resilience of remittances highlights their critical role in supporting economies and households in low- and middle-income countries.
Also notable is the broader global trend toward digital and mobile remittances. According to a February 2024 study by IBS Intelligence, the global digital cross-border transfer market was valued at $148 billion at the start of the year. This market is estimated to reach approximately $340 billion by 2030 at a compound annual growth rate of 12.58 percent. 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 growth in foreign fund transfers from Saudi Arabia highlights the pivotal role of the kingdom in the global remittances landscape. The combination of high wages, favorable employment conditions, technological advances, and significant expatriate populations contribute to strong flows of funds to countries around the world. This trend not only reflects the region's economic dynamism but also underscores the important support that migrants provide to their families and economies back home.
