The Gulf Cooperation Council states are the second-largest source of remittances in US dollar terms but by far the largest when remittances are measured as a share of their GDP, according to a World Bank economist.  

The proportion of foreign workers in the Gulf often exceeds 70% of the population. Saudi Arabia and the UAE are large sources of remittances for South Asia, North Africa, and Southeast Asia, said Dilip Ratha, lead economist at the World Bank and an advisor to the Multilateral Investment Guarantee Agency. Growth in remittances from this region could shift, he added. 

“Governments in the Gulf are starting to recruit fewer foreign workers as part of a push to employ more locals and are diversifying recruitment of foreign workers, targeting those from Africa and Central Asia,” Ratha noted.

Populations are aging in many advanced economies and this demographic imbalance will increase the supply of migrant workers. 

Climate change and extreme weather will add to migration pressures, Ratha said.

Africa is the most expensive place for money transfers, with remittance costs reaching 8%.

On average, customers pay $12.50 in costs whenever they send $200 to a low- or middle-income country, which represents 6.3% of the transaction and is more than double the target set under the United Nations Sustainable Development Goals.

According to Ratha, lowering the cost of remittance by five percentage points would cut costs globally by nearly $30 billion a year.

Most of the savings would benefit poor migrants and their families in developing economies, he said.

“Where regulations have freed fintech companies to take advantage of modern technology, the cost of sending remittances has fallen sharply. With better regulation and lower costs, remittances have the potential to improve financial inclusion further,” he added.

India is the world’s largest recipient, becoming the first country to receive more than $100 billion in annual remittances. Mexico, China, and the Philippines are also large recipients. 

The United States is the largest source country for remittances, especially for Latin America and the Caribbean. 

(Editing by Seban Scaria