RIYADH: Remittances from Saudi Arabia’s estimated nine million mostly Asian foreign workers are soaring as the Kingdom recruits more of them for its massive development plan, an economist said Saturday.
At $18.4 billion last year and 15.0 billion in the first eight months of 2009, earnings sent abroad now equaled four percent of Saudi Arabia’s gross domestic product, John Sfakianakis of Banque Saudi Fransi said, citing government data.
Remittances in the January-August 2009 period jumped 12 percent compared with 2008, according to central bank statistics.
That was a slowdown from the 26.7 percent pace of 2008 versus 2007, but remarkably strong considering the global economic slowdown, according to Sfakianakis.
“That’s a huge number,” he said of the total amount sent out by millions of the mostly Asian and Middle Eastern workers.
The reason was more the continued Saudi recruitment of laborers to build the Saudi government’s huge slate of infrastructure projects — new roads, rails, ports, airports, and cities — that amount to about 400 billion dollars’ worth in the five years to 2012.
“It is more due to the growth in the expatriate force rather than the rise in salaries,” Sfakianakis said.
But, he added, “For any economy it is a concern, if you have four percent of GDP going out.” Saudi Arabia was the world’s third largest source of foreign worker remittances in 2008 after the US and Russia — far larger economies — according to the World Bank.
The Saudi government says around six million foreigners work in the Kingdom out of a total population of 26 million.
But, said Sfakianakis, “the unofficial figure is closer to nine million.”
In a report this week, Banque Saudi Fransi — an affiliate of France’s Credit Agricole group — said Saudi remittances are crucial to several poor economies.
“Remittances from expatriate workers form a significant source of hard-currency income for oil-importing economies in the Middle East and Asia, such as India, Pakistan and Egypt,” it said.
Sfakianakis said that as long as Saudi Arabia continues to enjoy high prices for its oil exports, the remittances are not a problem.
But, he added, it remains a challenge, with a high unemployment rate among Saudis.
“It is income that is lost to foreigners that could be in some ways earned by Saudis,” he said.