By Andy Sambidge
World Bank report says moves to curb foreign workers unlikely to hit cashflows in the near-term
Moves by some Gulf states to tighten quotas for foreign workers are unlikely to have much of an impact on remittance flows in the near-term, the World Bank has said.
It said in a new report that plans by GCC countries, which are dependent on migrant workers, to mull tighter quotas for migrant workers to protect jobs for their own citizens were unlikely to have an impact in the near- to medium-term.
“Such policies may impact remittance flows to developing countries in the longer term,” said Dilip Ratha, co-author of the Migration and Development Brief.
“But in the medium-term the risk of disruption to these flows is relatively low.”
The report, which said remittance flows to developing countries are expected to total $351bn this year, comes as Saudi Arabia embarks on a new drive to find jobs for its citizens.
High oil prices have helped provide a cushion for remittances to South and East Asia from the Gulf Cooperation Council (GCC) countries, the report said.
Saudi Arabia's suggestion in October that it will try to limit how much money expatriate workers send home showed concern about the cost of having foreigners make up nearly a third of the population.
An estimated nine million foreign workers and their dependents remitted SR26.8bn ($7.1bn) out of the country in the second quarter of this year, central bank data showed.
That amount was equivalent to 17 percent of Saudi Arabia's current account surplus at a time of historically high oil revenues.
According to the World Bank report, the top recipients of officially recorded remittances, estimated for 2011, are India ($58bn), China ($57bn), Mexico ($24bn), and the Philippines ($23bn). Other large recipients include Pakistan, Bangladesh, Nigeria, Vietnam, Egypt and Lebanon.
While the economic slowdown is dampening employment prospects for migrant workers in some high-income countries, global remittances, nevertheless, are expected to stay on a growth path and, by 2014, are forecast to reach $515bn, the World Bank added.
Of that, $441bn will flow to developing countries, according to the latest issue of the Bank’s Migration and Development Brief, released at the fifth meeting of the Global Forum on Migration and Development in Geneva.
“Despite the global economic crisis that has impacted private capital flows, remittance flows to developing countries have remained resilient, posting an estimated growth of 8 percent in 2011,” said Hans Timmer, director of the Bank’s Development Prospects Group.
“Remittance flows to all developing regions have grown this year, for the first time since the financial crisis.”
Remittance flows to four of the six World Bank-designated developing regions grew faster than expected - by 11 percent to Eastern Europe and Central Asia, 10.1 percent to South Asia, 7.6 percent to East Asia and Pacific and 7.4 percent to Sub-Saharan Africa.
In contrast, growth in remittance flows to Latin America and the Caribbean, at 7 percent, was lower than expected due to continuing weakness in the US economy.
The report also said the Middle East and North Africa, affected by civil conflict and unrest related to the Arab Spring, registered the slowest growth (2.6 percent) among developing regions.
The World Bank said it expects continued growth in remittance flows going forward, by 7.3 percent in 2012, 7.9 percent in 2013 and 8.4 percent in 2014.
The report added that remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011 due to increasing competition in large volume remittance corridors such as UK-Nigeria and UAE-India.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.