Total remittances drop to $8.2bn in Q2, with the average remittances per worker declining for second consecutive quarter
Remittances sent home by foreign workers in Saudi Arabia fell to their lowest level in four years during the second quarter of this year, according to new research.
Analysis by Jadwa Investment revealed that total remittances dropped to $8.2 billion in Q2, with the average remittances per worker declining for the second consecutive quarter.
The research note added that going forward, the introduction of expat dependency fees, which came into force in July, could lead to a rise in the number of expat dependents being repatriated and, concurrently, a rise in remittances.
About 12 million foreigners work in Saudi Arabia, doing many of the lower-paid jobs shunned by Saudi citizens. About two-thirds of Saudi workers are employed by the public sector.
The dependents’ fee is expected to raise $260 million annually and is part of Saudi Arabia's plan to fill a budget deficit due to sustained lower oil prices.
Critics have suggested the additional financial burden on expat families will make the kingdom less attractive for professionals. Authorities are also attempting to reduce the number of expats working in the kingdom by encouraging more locals to join the private sector.
Research by Jadwa also showed that the Q2 balance of payments data showed the Saudi current account surplus narrowing quarter-on-quarter, but still remaining positive at $1.1 billion.
Cash withdrawals from ATMs and point of sale transactions showed a downward trend. Growth in the non-oil sector also edged downwards, albeit marginally, but remained in expansionary mode.
Central bank reserves fell to $485 billion in September. Looking ahead, the $12.5 billion international sovereign bond, issued at the end of September, should help alleviate the pressure on foreign exchange reserve withdrawals in the next few months.
Jadwa added that prices in September were down by 0.1 percent year on year, continuing the deflationary trend since the beginning of 2017.
Real estate prices improved quarter-on-quarter in Q3, but remain in the negative territory year-on-year, down 6 percent.