Remittances from Qatar fell a whopping 10 percent last year, from $11.28 billion in 2013 to $10.01 billion in 2014, according to newly released World Bank figures.
The decline follows four years of growth in Qatar remittances, and comes at a time when people are sending less money abroad around the world, the financial center has said.
Citing exchange house officials, the Peninsula reports that the drop is due to Qatar’s rising cost of living:
“House rents and children’s school fees as well as food prices have all gone up here considerably in recent times,” said a senior exchange house official.
“This has reduced the disposable income of expatriates drastically, which has, in turn, dented their ability to send money home,” he said, asking not to be named. “Remittances did not grow in proportion to the population increase last year.”
Residents may also be spending more of their money inside of Qatar due to a demographic shift in the 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 here.
This could spur expats to spend more money on goods and services locally, rather than sending their earnings abroad, especially as more retail and leisure offerings open up.
Notably, last year’s Qatar Central Bank figures for 2014 were more optimistic, but still showed a decline in remittances from QR40.55 billion ($11.14 billion) to QR40.37 billion ($11.1 billion).
Forecast
According to the World Bank, falling oil prices hit countries like Russia fairly hard last year. But Gulf countries seem unscathed for now:
“The fall in oil prices does not appear to have reduced remittances from Gulf Cooperation Council (GCC) members, especially to India, Bangladesh, Nepal, Pakistan, and several countries in the Middle East and North Africa.
The outlook, however, is uncertain. The substantial financial resources and long-term infrastructure development plans of the GCC countries imply that they will continue to demand migrant workers.3 However, remittance flows could decline if the oil price were to remain low for a few years.”
Thoughts?