A growing share of Qatar’s wealth is staying inside the country, rather than being sent abroad by expats, an analysis of government data shows.
Each year, the country’s foreign workers send billions of riyals in remittances back home. After a minor dip in 2012, remittances climbed 8.34 percent last year to QR40.55 billion (US$11.14 billion), according to newly released figures from Qatar Central Bank.
However, as a share of Qatar’s rapidly expanding economy, the amount of money leaving the country has declined over the last five years.
Figures published by QCB and the Qatar Statistics Authority show that remittances totaled 5.48 percent of nominal GDP last year – roughly on par with 2012, but down from 7.26 percent in 2009.
While remittances are an important part of the economy for receiving countries, observers in sending countries often view such monetary outflows as a missed opportunity to grow the local domestic economy.
“Remittances (are) nothing but disposable income made in Qatar and spent outside in another economy,” researcher Engy Ziedan told Doha News earlier this year following the release of a Cost of Living Reports Middle East publication.
As such, the reduction is likely to be viewed as a positive development within Qatar.
There are likely several reasons behind the decline in remittances relative to nominal GDP. For example, even though the local economy is growing, the salaries of many expats has remained largely the same.
This could be because the large numbers of Indian, Bangladeshi and Nepali citizens willing to come to Qatar as laborers reduces the pressure on local companies to raise compensation rates.
Additionally, Qatar’s rising cost of living means that residents are spending more money on housing and other essential items.
The declining share of remittances could also signal a demographic shift in Qatar’s expat population.
While the country’s foreign workforce is still dominated by men who come to the country alone, some have suggested that it’s in the country’s economic interest to allow more families to move to the country.
This, in turn, would lead foreign workers to spend more money on goods and services locally, rather than sending their earnings abroad, especially as the number of retail and leisure offerings in the country increases.
According to separate data, Qatar ranks in the middle of its Gulf peers in terms of the amount of money leaving the country as remittances.
Figures published this month by the World Bank state that the largest outflows in the region come from Saudi Arabia, where remittances totaled US$34.98 billion last year. The second-highest figure was Kuwait, at $15.24 billion.
The World Bank added that outgoing remittances in Qatar totaled $11.28 billion last year, a slightly higher number than the figure published by the Qatar Central Bank.
While the World Bank did not publish any 2013 figures on Bahrain, that country’s remittances were likely the lowest in the GCC. In 2012, the country’s foreign workers sent $2.07 billion abroad.
Notably, such statistics only capture the amount of money sent through official channels. The World Bank has previously suggested that foreign workers may pursue other means of moving money abroad to avoid paying transfer fees, which average 7.9 percent globally.
Remittances are an important source of income and foreign currency for developing countries. No breakdown of the most popular sending countries was given by QCB.
But worldwide, the largest remittance receiving country last year was India, attracting about $71 billion.
India was also the largest recipient of remittances sent from Qatar in 2012, according to previous World Bank data.
More than $2.29 billion was sent from Qatar to India that year. It was followed by Nepal at $1.99 billion and Pakistan at $1.23 billion.