Instant cash flow

Banking reforms and incentives from money exchangers have led to a manifold increase in transactions

Remittances are a blessing in disguise for an economy and act as a catalyst in moving the wheel of development. The inflow of foreign exchange into the national exchequer is always welcomed by all governments, irrespective of the respective country's indigenous strength and soundness, as they contribute to macroeconomic stability. Especially, nations that have a large diaspora are fortunate enough to be at the receiving end, as cash flows in the form of foreign currency lead to a strengthening of economic indicators.
An estimated $600 billion cross borders worldwide per annum (2016-17 World Bank statistics), and the potential is on the rise. Though tracking remittances is a difficult task, they inevitably are considered significant assets sent in from migrant workers. In an era of globalisation, efforts are underway to promote transactions through formal banking and money exchange channels, and to crack down on money-laundering tendencies.
While the UAE is a second home to more than 200 nationalities, the country has a sophisticated and foolproof remittances network, and all transactions are conducted in a legal format. Some of the leading communities in the UAE who transact significant foreign currency chunks are Indians, Pakistanis, Filipinos, Bangladeshis as well as Egyptians and Syrians.
India retains the top position as recipient of remittances from its diaspora, who sent in around $69 billion during the fiscal year 2017. This accounts for roughly four per cent of the country's GDP. A significant chunk of India's remittances come from the Middle East, which houses the largest number of immigrant workers.
While, the UAE is home to more than 2.5 million Indians, and they have contributed 34 per cent of total outward remittances in 2017, the estimates go beyond $4.5 billion per quarter.
In terms of remittances, India ($69 billion) is followed by China ($64 billion); the Philippines ($33 billion), and Egypt ($20 billion). World Bank says that India's remittances are expected to grow at 2.5 per cent in 2018.
Similarly, a staggering $25 billion is received by Pakistan in the form of remittances. Estimates say an average of $1.7 to $1.9 billion is received on a monthly basis. Most of the remittances are from the Middle East and Gulf countries, especially Saudi Arabia, the UAE, and Oman.
Remittances to the Philippines remains resilient through challenging economic conditions, as personal remittances inched up 1.3 per cent to $7.81 billion in the first quarter of 2018, up from $7.71 billion in the same period in 2017.
Money sent home by overseas Filipinos account for around 10 per cent of the country's gross domestic product and is a major source of income for family members of expats in the country. The UAE is home to around 700,000 Filipinos, who supplement the Philippines' economy at an average of $600 million annually as remittances.
The World Bank says that Philippines' growth outlook remains positive but subject to risks. The stakes, nonetheless, are many as the country is dependent on overseas workers' remittances and business process outsourcing. Remittances, mostly from the Middle East, Europe and the US, are equivalent to 12 per cent of the GDP. However, as the fastest growing economy in the region, the Philippines is likely to retain its domestic demand.
A number of reforms in the banking sector and incentives offered by money exchanges have led to surmounting of remittances, indicating a wave of development and liquidity on either end of the economic transaction.
- mehkri@khaleejtimes.com

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