Remittances by Arab migrant workers to home economies were less impacted than feared in 2009
During the economic boom of 2003-2008, the Gulf states drew in armies of workers from around the world. Many office workers, in particular, hailed from other Middle Eastern nations, most notably Egypt, Lebanon, Syria, Jordan, and the West Bank and Gaza.
Precise figures are hard to come by, but it is estimated that in 2008 there were about 4.5 million non-Gulf Arabs working in the GCC. Those from Egypt and the Levant made up about 2.5 million, with Arabs from the Maghreb, Yemen and Sudan comprising the remainder.
Remittances from migrant workers make a huge contribution to the economies of these countries. In Jordan and Lebanon, they account for almost a quarter of gross domestic product (GDP), while in Egypt they comprise about 4 per cent of GDP.
The IMF is forecasting gross economic product growth in the GCC to rebound to 4.9 per cent this year
Data from the Washington-headquartered World Bank shows that between 2005-2008, remittances into Egypt and the Levant countries rose some 53 per cent, to a total of $21.2bn from $13.9bn. Of the $21.2bn, Egyptians remitted some $8.7bn.
The Lebanese sent home not much less at $7.2bn. Jordanians transferred back far more than Palestinians - $3.8bn against $630m - despite the latter’s diaspora being much larger.
These figures represent total remittances from around the world, but it is estimated a large percentage of Arab migrant workers are employed in the Gulf. Almost 50 per cent of Egypt’s overseas workers are based in the Gulf; while some 75 per cent of Syrians and an even higher percentage of Jordanians work in the region. The figure for Lebanon is lower at 34 per cent.
The slowdown in the regional economies that began in late 2008 squeezed the Gulf labour market. Thousands of people lost their jobs and were forced to return home to countries where unemployment is high and job opportunities few.
In Egypt and Lebanon, unemployment is about 10 per cent. In Jordan and Syria, it is higher at about 13 per cent, while in the occupied territories unemployment runs as high as 25 per cent. The Egyptian press suggested that up to 300,000 workers may have returned home from the Gulf during the past 18 months. That constitutes a quarter of the Egyptian workforce in the GCC.
There was considerable concern at the end of 2008 that the outflow would turn into a mass exodus as many workers started to return home. However, data seems to indicate that the Arab migrant workforce in the Gulf has proved quite resilient during the downturn. While some workers have felt the pinch, particularly in the construction and real estate sectors, many have managed to ride out the storm.
Preliminary figures from the World Bank show that remittances in 2009 held up well and were little changed on the previous year. Total remittances into Egypt and the Levant fell by 6 per cent to $19.9bn in 2009. But the figure is higher than that transferred in 2007 and more than two and a half times greater than the level of transfers a decade ago. Egypt experienced the largest fall, with remittances declining by more than 10 per cent. Money flows into the countries of the Levant declined only marginally.
These figures are corroborated in part by data showing current transfer debits (which represent outward remittances) in those Gulf states for which statistics are available.
In Bahrain and Kuwait, current transfer debits fell only by 6 per cent and 3 per cent respectively, while those in Saudi Arabia actually rose by 20 per cent.
The likely reason behind the increase in the kingdom is that since the beginning of 2009 Riyadh has embarked on a huge public spending programme to ensure construction activity contined and that growth in the economy was maintained.
Public expenditure has also increased in most the Gulf states, which are now showing signs of emerging strongly from the downturn. This has been made possible by the recovery in oil prices to above $70 a barrel, from less than $40 a barrel in 2009.
The International Monetary Fund is forecasting GDP growth in the GCC to rebound to 4.9 per cent this year, from just 0.8 per cent in 2009. In 2011, growth is expected to be even stronger at 5.2 per cent.
This suggests that migrant workers who returned home in 2008-2009 could soon find employment again in the Gulf. If that happens their home economies will see remittance inflows accelerate sharply.
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