Kuwait’s ‘economic’ slowdown stalls global remittance growth

Kuwait’s ‘economic’ slowdown stalls global remittance growth

KUWAIT CITY, Dec 19: The World Bank attributed the slowdown in the growth of financial transfers from the Gulf, whether to Asia, Egypt or other countries compared to 2022, to the decline in economic growth in Kuwait and Saudi Arabia by 2023, from 8 percent to 1.5 percent, and the decline in growth by half in the rest of the Gulf countries due to the decline oil prices and production cuts in the OPEC + countries, reports Al-Rai daily. A recent World Bank report stated that after remittances to South Asia recorded a growth of 12.2 percent in 2022, it is likely to slow to 7.2 percent in 2023.

This regional average is the result of high growth in half of the countries of South Asia — Bangladesh, India, Nepal, and Sri Lanka — and low growth in the other half — Afghanistan, Bhutan, the Maldives, and Pakistan. The main drivers of remittance growth in 2023 are the historically tight labor market in the United States, higher employment growth in Europe, reflecting the widespread use of worker retention programs, and lower inflation in high-income countries.

The report revealed that the UAE, Saudi Arabia, Kuwait, Oman, and Qatar represent 11 percent of the total remittances in India, indicating that the growth of remittances to low- and middle-income countries slowed to 3.8 percent in 2023 after reaching an average of about 9 percent during the previous two years. The report added that the value of remittances of $669 billion to low- and middle-income countries exceeds expectations in the Migration and Development Brief (published in June 2023), supported by the continued strength of labor markets in OECD and Gulf Cooperation Council countries.

The World Bank pointed out that what raises concern is the risk of a decline in the real income of migrants in 2024 due to the high level of global inflation and low growth expectations, explaining that in 2023, it is estimated that remittance flows to low- and middle- income countries will reach $669 billion as labor markets continue flexibility in advanced economies and Gulf countries in supporting migrants’ ability to send money to their homelands.

The World Bank report showed that remittance flows to Latin America and the Caribbean rose to 8 percent, South Asia to 7.2 percent, East Asia and the Pacific by 3 percent, and Sub-Saharan Africa by 1.9 percent. He indicated that the sharp decline in financial flows to Egypt contributed mainly to the reduction in funds transferred to the Middle East and North Africa region for the second year after it declined by 5.3 percent.

He stated that financial transfers to Europe and Central Asia decreased by 1.4 percent after rising more than 18 percent in 2022. According to the World Bank’s Global Remittance Rates Database, remittance costs remain persistently high, with the cost of sending $200 on average costing 6.2 percent as of the second quarter of 2023. Compared to last year, sending money to all regions was more expensive, including That is the Middle East, excluding North Africa. Banks remain the most expensive channel for sending remittances (average cost of 12.1 percent), followed by post offices (7 percent), money transfer offices (5.3 percent) and mobile operators (4.1 percent).

The post Kuwait’s ‘economic’ slowdown stalls global remittance growth first appeared on ARAB TIMES – KUWAIT NEWS.

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