Saudi Arabia Remittance Market is Witnessing Decline in Net Migration Rate – Makreo Research
Saudi remittances market has witnessed positive growth in 2021, totaling SR~ billion, up from SR48.57 billion in 2020. Rising oil prices and the associated improvement in economic activity have created a surge in money transfers by ex-pats to their home countries as well as remittances by Saudis to other nations in the Gulf Cooperation Council and Russia. Remittance in Saudi Arabia witnessed positive growth during the Pre-COVID period however after during the health emergency this sector was most affected. It is imperative to understand the Average Remittance Transaction Size therefore Makreo's research has studied the market in terms of inward and outward remittances. According to the world bank remittance report 2021, remittances to Saudi Arabia slowed owing to moderate growth in high-income economies and a drop in migration to GCC countries.
Saudi Arabia is one of the most economically developed nations, which is making the country a popular place for people to emigrate from several South Asian nations. More than 37% of the country's 33 million residents are foreigners, with India, Pakistan, Nepal, the Philippines, Bangladesh, Sri Lanka, and Egypt serving as major source countries. As a result, the industry receives a significant number of outbound remittances from the expats who frequently send money home.
Saudi Arabia holds a prominent position among G20 countries, Saudi Arabia continues to be the main source of remittances for nations like Yemen. Moreover, the outbreak of Covid-19 has been a turning point for the remittance market in Saudi Arabia.
Saudi Arabia's remittances have been gradually dropping since 2015 as a result of lower oil prices and the government's preference for hiring Saudi citizens over immigrants. When the global pandemic struck in 2020, Saudi Arabia surpassed the US and the UAE to become the third-largest source of remittances worldwide. However, in the past few years, more and more people are seeking to emigrate from Saudi Arabia as a result of the growing emphasis on recruiting Saudi nationals for higher-level positions. The size of the remittance industry by value decreased as a result. but, after COVID, the situation has changed because people are more likely to save money.
On the other hand, the inbound remittance market was hindered by the pandemic and experienced a 10% negative growth rate, but in 2021 the market recovered and expanded at a positive rate of 3%. The recovery of host countries in the European Union (most notably France and Spain), as well as an increase in world oil prices that has helped the GCC countries, have both boosted remittances to the Middle East and the Saudi Arabian region.
Increasing Digitization: In Saudi Remittance Market, digital remittance channels have been more well-liked since the COVID-19 pandemic and given their growing adoption rate, it is anticipated that they will eventually replace more conventional means. Additionally, the fact that the majority of remittances in Saudi Arabia are made by blue-collar workers who are often not tech-savvy presents one of the biggest challenges for banks and other players trying to go digital. Therefore, the industry has to be taught how to use the technology and the advantages that come with it in order to get into this market.
Migrant Population: Between March 2011 and August 2018, approximately 3.9 million migrants were deported in Saudi Arabia, a pace of over 500,000 per year on average. In 2020, the number of international migrants including refugees is expected to reach 281 million. Saudi Arabia accounted for 4.6% of the global migrant population or 13 million people. Personal remittances from Saudi Arabian ex-pats increased by 2.79% in 2021, amounting to roughly SR ~ billion.
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