By Sachin Kumar
DOHA: Remittances from Qatar and GCC countries have continued to grow despite the sharp drop in oil prices. Total remittances by expatriates from Qatar were around $11.2bn in 2014. However, the remittance outflow from the region is likely to see a slowdown due to low oil prices and other factors, said a report by the World Bank Group’s Global Knowledge Partnership on Migration and Development (KNOMAD).
“Remittance outflows from the major oil-exporting countries of the GCC continued to grow in 2015, as the GCC countries have used their substantial reserves to maintain spending levels, and also because the GCC currencies are linked to the US dollar,” said ‘Migration and Remittances Recent Developments and Outlook’ report released recently.
“Remittances from Saudi Arabia and Qatar, which account for around half of remittances from the GCC, increased by seven percent through the third quarter of 2015,” it added.
Globally Qatar ranks 11th in top remittance sending countries while United States is in top with an estimated $56.3bn recorded outflows in 2014.
While GCC countries have not seen any decline in remittances outflow some countries are significantly affected by oil price decline. Remittance outflows from Russia are estimated to have fallen in 2015 by around 40 percent in dollar terms.
“More recent data from the fourth quarter, however, indicate a slowdown in remittances from the GCC countries. If lower oil prices persist, remittance outflows from GCC countries are likely to slow further,” said the report.
“In the face of the steep drop in the oil price, incomes in GCC countries have so far been supported by drawing down assets. A further decline in the oil price, or even the growing belief that the price will not rise over the long term, could encourage authorities to adjust to lower oil prices. The result would be reduced incomes for migrants in these countries, and perhaps steps to restrict hiring of or even repatriate foreign workers, that could substantially reduce remittance outflows to the Middle East, South Asia, and East Asia and the Pacific,” it added.
In 2015, worldwide remittance flows are estimated to have exceeded $601bn from $592.9bn in 2014.
The report expects remittances to the MENA (Middle East and North Africa) region will grow only modestly in 2016 and 2017, significantly slower than remittances to all other regions. Besides the slow recovery in Europe and the strength of the US dollar, the major driver is an expected reduction of outward remittances from the GCC countries. The beginning of fiscal adjustment in response to the fall in oil prices could lead to wage cuts and the dismissal of foreign workers, in part due to a step up of nationalisation policies targeted at high skilled workers, said the report.
The Peninsula
