Remittances outflow from the UAE fell by nearly three per cent last year, reaching $38.5 billion (Dh141.3 billion) as compared to $39.67 billion (Dh 145.5 billion) in the previous year, according to the World Bank.
Data showed that the outward remittances have been consistently falling for the past four years after peaking in 2019 at $52.88 billion (Dh194 billion).
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“Outward remittances from Saudi Arabia and the UAE slowed, reflecting some correction from the pandemic-related distortion,” the World Bank said in its latest Migration and Development report.
The UAE is the 8th largest destination for migrant workers globally, housing 8.71 million with most of them from India, Pakistan, the Philippines, the UK, Egypt, Sri Lanka, Lebanon, and China among others.
Outward remittances from the GCC countries to destination countries decreased by 13 per cent in 2023 compared to 2022. Notably, outward remittances from the GCC countries showed an upward trend from 2010 to 2019, with some fluctuations, but a declining trend seems to have set in after 2019.
“The decline likely reflects post-Covid adjustments, as well as Saudi Arabia’s recent policy allowing foreign migrant workers to bring their families to the country when they work, possibly resulting in fewer remittances being sent to their home countries. This could have negative implications for remittance flows to Pakistan and some North African countries,” the World Bank reported.
Top recipient countries
Globally, the top five recipient countries for remittances in 2023 were India, with an estimated inflow of $120 billion, followed by Mexico ($66 billion), China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion).
“Considering robust labour market conditions in destination countries, it is likely that a significant share of remittances flowed to Pakistan through informal channels in 2023, leading to the drop in formal remittances,” the World Bank said.
Informal channels, also called hawala or hundi, are used by migrants where there are no banking channels to fund money. In addition, hawala operators also offer better rates to remitters. The UAE regulated the hawala system, asking all the individuals to register.
World Bank projected that remittances to India are forecasted to grow at 3.7 per cent to $124 billion in 2024, and a 4 per cent increase to reach $129 billion in 2025.
“The diversification of India’s migrant pool between a large share of highly skilled migrants employed mostly in high-income OECD markets and the less-skilled migrants employed in the GCC markets is likely to lend stability to migrants’ remittances in the event of external shocks,” it said.
Remittance flows to Pakistan are forecasted to recover and grow at about 7 per cent to reach $28 billion in 2024 and increase at 4 per cent to about $30 billion in 2025.