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Remittances of Arab expats rise to $24.7b

(MENAFN - Khaleej Times) DUBAI — Total remittances of Arab expatriates working in the Gulf region and abroad rose 5.2 per cent to $24.7 billion by the end of 2006 from $23.5 billion in 2005, according to the latest World Bank report.

The report said the UAE, accounting for 16 per cent of the total expatriate remittance from the GCC, is the second largest source of remittances in the Gulf region after Saudi Arabia. The kingdom, which is also the second largest source of remittances in the world after the United States, accounts for an estimated annual outflow of some $16.2 billion.

This accounts for 60 per cent of the $27 billion remitted annually by expatriates working in the six GCC states. Saudi Arabia and the UAE are followed by Kuwait, Qatar, Oman and Bahrain.

While the Middle East region is the fifth largest recipient of remittances in 2006, Latin America tops the list with $53.4 billion, followed by Asia and the Pacific region with $45.3 billion, and South Asia with $35.7 billion.

Among Arab countries, Lebanon is the largest recipient of remittances with an estimated 2006 figure of $5.2 billion, followed by Morocco ($5.1 billion), Egypt ($3.3 billion) and Jordan ($2.8 billion). These figures account only for remittances sent home through formal channels, mainly banks, while informal channels are equally important and if accounted for could well increase total remittances by 50 per cent.

According to the World Bank, Arab expatriates working abroad would maintain their uptrend in remittances for the foreseeable future. "The economies of Saudi Arabia, the UAE, Kuwait and the other Gulf countries have been growing at high rates for the past four years and are forecast to continue to do well in the years ahead. The demand for Arabic-speaking labour in the Gulf — especially in such growth sectors as telecommunications, information technology, medic, education, finance, training, consulting and management, among others — is likely to be on the rise in the years ahead."

The report noted that the number of new university graduates in Jordan, Lebanon, Egypt and other labour-exporting countries of the region is projected to far exceed employment opportunities in their respective domestic markets. For the new graduates, the Gulf countries with their relatively high compensation and remuneration packages remain their first choice of employment.

"The GCC's population could rise from 36 million in 2005 to 50 million in 2015, to support the region's booming economic growth conditions. Increasingly more long-term professional migrants with the right to buy property and shares will be residing in the Gulf countries, creating demand for all kinds of services, and changing the structure of the region's consumer and financial-services markets," the report said.

The report said the remittances that these expatriates send back home have become an important source of external funding and have greatly affected the labour-exporting countries' income and consumption levels. "For example, Jordan's gross national product (GNP), which is the income generated by nationals inside and outside the country, is 25 per cent higher than the income generated domestically (GDP) due to the sizeable amount of remittances transferred by Jordanians working abroard."

However, the World Bank report warns that like any unearned income, remittances may discourage those who reserve them from seeking productive employment opportunities. Remittances derived mainly from expatriates working in the Gulf have in a way "petrolised" the economies of the Arab labour-exporting countries, making them also dependent on cyclical oil prices.

"Nonetheless, strengthening economic ties with the Gulf countries through remittances, capital inflows, regional tourism and exports to a booming Gulf market should be looked upon as an opportunity and a diversification play rather than a threat. In the long run, the benefits to the labour-exporting countries would far exceed the costs of losing skilled labour."

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