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Outward remittances from the UAE were among the highest in the world in 2023, despite slowing 3% y-o-y to USD 38.5 bn, according to data (pdf) from the World Bank and Knomad. The slowdown was attributed to a “correction from the pandemic-related distortion,” the World Bank and Knomad said in a report (pdf). Outflows were second only to the United States, which saw some USD 85 bn in outflows, according to the data. Saudi Arabia came in third at USD 38.39 bn, according to the data.
Yes, but: While the UAE ranks among the top sources of remittances globally, it plays an intermediary role in a lot of cases. “The country increasingly serves as an important international financial center through which funds flow. A significant percentage of the funds may not necessarily originate from migrants working in the UAE,” World Bank Lead Economist Dilip Ratha told EnterpriseAM UAE.
Remittance outflows from the GCC fell 13% y-o-y in 2023, marking a reversal from earlier upward trends, the report reads. The decline was mainly attributed to post-covid adjustments and Saudi Arabia’s new policies allowing migrant workers to bring their families to the Kingdom.
The cost of sending remittances from the UAE rose, with Bangladesh seeing the highest surge (172%) in 4Q 2023, while sending USD 200 from the UAE to the Philippines was also 7% more expensive on a y-o-y basis. This was in line with a wider trend that saw remittance costs for USD 200 jump during the year.
On the flip side, sending money within the region is less costly: The cost of sending USD 200 from the UAE to Egypt fell in 2Q 2023 compared to 2Q 2022, according to the report. Sending money within the region, including GCC countries, remains affordable — below 3% in some corridors.
ELSEWHERE IN THE REGION-
Remittance inflows in the MENA region fell 15% y-o-y in 2023 to USD 55 bn. The drop in regional remittances was mainly attributed to the decline of flows to Egypt, which saw some of its FX inflows diverted towards unofficial channels.
But the trend is expected to reverse to an increase of 4.3% y-o-y in 2024 and 5.5% in 2025, according to the World Bank. Oil exporters in the region, such as Iraq and Algeria, are poised to benefit from rising hydrocarbon prices, contrasting with challenges faced by oil-importing nations like Egypt, Jordan, Lebanon, Morocco, and Tunisia in their remittance outlook, according to the report. Egypt’s recent economic reforms and UAE investments boost confidence in formal remittance channels.
