July remittances drop 7% in Saudi Arabia, but industry optimism remains intact

July remittances drop 7% in Saudi Arabia, but industry optimism remains intact
Global remittances in 2020 dropped 1.6 percent below pre-COVID levels, according to data from the World Bank. (Shutterstock)
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Updated 01 September 2021

July remittances drop 7% in Saudi Arabia, but industry optimism remains intact

July remittances drop 7% in Saudi Arabia, but industry optimism remains intact
  • The COVID-19 pandemic that paralyzed industries and halted international travel contributed to this short-term decline

DUBAI: Saudi Arabia saw a seven percent drop in personal transfers by non-Saudis in July, according to latest central bank figures, but optimism for the remittance industry is strong.

In its monthly bulletin, the Saudi Arabian Monetary Authority (SAMA) showed remittances falling from SR13.5 billion in June to SR12.52 billion in July – a drop of almost SR1 billion.

The COVID-19 pandemic that paralyzed industries and halted international travel contributed to this short-term decline, remittance expert Praveen Chandiramani said, but a rebound is expected.western union

“The remittances in this quarter – starting from July to September – is definitely going to rise,” he told Arab News, attributing it to the return of migrant workers to the Gulf.

Chandiramani, who has worked over two decades on the Gulf’s money transfer sector, added: “Expatriates who were stuck back home are slated to come back as borders reopen, and hopefully that will drive remittances.”

Global remittances in 2020 dropped 1.6 percent below pre-COVID levels, according to data from the World Bank, but experts remained optimistic about the recovery of the industry given that personal transfers provide a “critical lifeline” to families in low-income countries.

In fact, in the Middle East, countries such as the UAE and Saudi Arabia remained to be the largest sources of remittances during the year.

“The pandemic didn’t stop me from sending money to my family in the Philippines. I even had to increase my monthly transfer because I knew their situation was much worse,” a Dubai-based Filipino waitress, who wanted to stay anonymous, told Arab News.

Chandiramani said recovery in remittance flows was expected as countries slowly cope with the changes brought by the pandemic.

“The entire world felt the tremors of the pandemic – people started working from home, there were lockdowns and other knee-jerk reactions from governments, but in the end, it was important to save a life,” he said.

He added: “In spite of the fact that the salaries were a bit bad in certain cases in the initial part of the COVID-19 pandemic, over a period of time, it has just picked up.”

Future of remittance

Aside from remittance figures, Chandiramani also highlighted the ongoing developments in the Gulf’s financial technology scene – which includes innovation for the money transfer sector.

“I think in the next three to five years, blockchain is going to be the order of the day. With this technology, the settlement time and cost will come down,” he said.

His company, WorkerAppz, is already using blockchain technology in some of the markets they serve – but its real potential will rely on banks and governments joining the system.

“While some banks in the Philippines, India, Pakistan, and Nepal have gone on blockchain, you require the entire system to follow suit – that’s how it would really show the advantage of blockchain,” he explained.

The popular fintech buzzword could offer broad advantages to the remittance industry, the expert said, including the security of payments.

Industry experts said blockchain’s decentralized nature makes it “practically impossible” to hack.


GAMI governor meets with major defense, security companies at FII

GAMI governor meets with major defense, security companies at FII
Updated 17 sec ago

GAMI governor meets with major defense, security companies at FII

GAMI governor meets with major defense, security companies at FII
  • During the meeting, Ahmed bin Abdul Aziz Al-Ohali discussed strategic directions in the military industries sector in Saudi Arabia
  • Al-Ohali highlighted the qualitative opportunities, great potential and unlimited support that the military industries sector enjoys in the Kingdom

RIYADH: The governor of Saudi Arabia’s General Authority for Military Industries met with various CEOs and leaders of major international companies operating in the military industries sector on the sidelines of the Future Investment Initiative on Thursday.
The meeting was attended by several companies including French defense group Thales, Boeing Defense, Space & Security, General Dynamics Corp., Leonardo SpA and Lockheed Martin.
During the meeting, Ahmed bin Abdul Aziz Al-Ohali discussed strategic directions in the military industries sector in Saudi Arabia.
He also discussed the Kingdom’s investment environment, which is witnessing an unprecedented push to empower local and international investors in light of the objectives of the Vision 2030 reform program to localize military industries in Saudi Arabia.
Al-Ohali highlighted the qualitative opportunities, great potential and unlimited support that the military industries sector enjoys in the Kingdom.
He said it is important for these companies to open headquarters in Saudi Arabia to enhance cooperation in the industrial sector and contribute to technology transfer and job creation.


TASI closes 0.4 percent down at 11,758 points: Market Wrap

TASI closes 0.4 percent down at 11,758 points: Market Wrap
Updated 28 October 2021

TASI closes 0.4 percent down at 11,758 points: Market Wrap

TASI closes 0.4 percent down at 11,758 points: Market Wrap

RIYADH: The Tadawul All-Share Index was down 49 points on Thursday closing at 11,758 points.

That represent a 0.4 percent decline.

Some 185.9 million shares changed hands in 301,000 deals, with heavy trading in AlRajhi Bank, Petro Rabigh, Sipchem

The market's decline comes under pressure from Petrochemical shares, led by SABIC's share, which fell 3 percent, to continue its decline for the third session.

On the other hand, Leejam Sports rose 5 percent to SR113.60 ($30.28), recording the highest close since its listing.

The Saudi British Bank's shares fell 2.2 percent after the bank announced a 15.5 percent drop in profits in Q3 to reach SR886 million ($236 million).

“Saudi Aramco" recorded gains of 0.1 percent. The company's shares ended the day at SR37.75 ($37.75) — the highest closing level since December 2019.

Petrochem, Sipchem, Petro Rabigh, SABIC Agri-Nutrients, Chemanol and Maaden declined between 4 percent and 6 percent.

The parallel market index "Nomu" was up 343.62 points, or 1.44 percent. It closed at 24255.84 points, after 1,348 trades.

The shares of MEPCO, Maharah and Astra Industrial recorded gains in today's session between 3 and 5 percent, amid high trading for those shares.


Saudi banks' September claims on private sector grew by $7.8bn: SAMA      

Saudi banks' September claims on private sector grew by $7.8bn: SAMA      
Updated 28 October 2021

Saudi banks' September claims on private sector grew by $7.8bn: SAMA      

Saudi banks' September claims on private sector grew by $7.8bn: SAMA      

 

Commercial banks' September claims on the private sector grew by SR29.4 billion in a month, the biggest monthly increase since June 2021.

The claims now stand at SR1.986 trillion ($529.5 billion).

Commercial banks' claims on the sector rose by 1.5 percent from SR1.956 trillion in August, Saudi Arabian central bank data published today show.

Commercial banks' September total assets grew by SR34.6 billion in month to SR3.151 trillion ($840.3 billion). Banks' total assets grew by 1.1 percent from SR3.117 trillion in August, according to data published by Saudi Central bank today.


A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap

A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap
Updated 28 October 2021

A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap

A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap

Economic growth in the US slowed to an annualized 2 percent in the third quarter of 2021, dropping from the 6.7 percent expansion it experienced in the second quarter, an advance estimate by the country’s Bureau of Economic Analysis showed. 

This is the lowest rate since the second quarter of 2020 when the economy suffered a historic contraction.

Consumer spending faced a setback due to shortfalls in some commodities as a rise in Covid-19 infections meant that the global supply chain underwent disruptions.

US jobless claims

Initial unemployment claims in the United States declined to 288,000 in the week ending 23 October, data released by the US Department of Labor showed. This is fewer than last week’s figure of 291,000 claims and is the lowest level since 14 March 2020.

The advance seasonally adjusted insured unemployment rate stood at 1.7 percent for the week ending 16 October, falling by 0.1 percent from the previous week’s level. This rate measures the percentage of the number of people receiving unemployment insurance.

Unemployment in Western Europe

The German unemployment rate tapered off slightly in September, falling to 3.2 percent down from 3.3 percent in the previous month, Germany's Federal Statistics Office said. However, the seasonally adjusted unemployment rate remained unchanged at 3.4 percent.

Meanwhile, Spain’s unemployment rate declined to 14.57 percent in this year’s third quarter, falling from 15.26 percent in the previous quarter, official data revealed. 

Japan's interest rates on hold

Japan’s central bank kept its rates unchanged for the short-term interest rate and 10-year government bond yields at -0.1 percent and around 0 percent respectively during its October meeting. 

The bank also cut its forecast for the rate of GDP growth for the current financial year to 3.4 percent down from July’s expectation of 3.8 percent.

Weak consumption and a slowdown in exports were mainly responsible for the downward revision.

As for 2022, the economic growth rate forecast was favorably altered to 2.9 percent compared to the previous 2.7 percent as vaccination rollouts gain momentum.

In addition, the bank slashed its consumer inflation estimate for the year ending March 2022 to zero compared to an earlier prediction of 0.6 percent, due to the impact of cellphone fee reductions and the change in the price index’s base year.

Looking at next year, the consumer inflation forecasts were the same at 0.9 percent.

Moreover, Japanese retail sales slipped by 0.6 percent year-on-year in September, compared to the previous month's much steeper fall of 3.2 percent. 

Spain’s inflation

Spain's annual inflation rate likely rose to 5.5 percent in October, according to a preliminary estimate by Spain's National Statistics Institute. This is a noticeable rise from the previous month’s 4 percent.

This is the biggest jump in consumer prices since September 1992 and was driven by soaring energy prices.

The annual core inflation rate, which excludes changes in volatile items, is also expected to reach a record 1.4 percent in October up from 1 percent in the previous month, a preliminary estimate showed.

In addition, consumer prices are predicted to rise 2 percent month-on-month, the highest since January 1986, after a 0.8 percent increase in September.

Brazil’s interest rate decision

For the sixth time this year, Brazil's central bank raised its interest rate by 150 basis points to reach 7.75 percent. At the start of the year, the interest rate in the country was just 2 percent.

This comes at a time when the country is grappling with double-digit inflation rates. The annual inflation rate for the country reached 10.3 percent in September. This is the second highest inflation rate among G20 countries, behind only Argentina.

Italy’s manufacturing and consumer confidence 

Italy's National Institute of Statistics (ISTAT) said that the manufacturing confidence index rose to 114.9 points in October compared to 113.2 points in September. Outlook for orders and future production improved while expectations for inventory levels were more pessimistic.

Additionally, the consumer confidence index went down by 1.2 points in October to 118.4, down from 119.6 in the previous month.


Universities are ‘late to act’ on climate change, says KAUST president

Universities are ‘late to act’ on climate change, says KAUST president
Updated 28 October 2021

Universities are ‘late to act’ on climate change, says KAUST president

Universities are ‘late to act’ on climate change, says KAUST president

The King Abdullah University of Science and Technology (KAUST) has raised $10 million to invest in technology to make plants grow with seawater, the institution’s president confirmed as he called on educational establishments to do more to tackle climate change.

Speaking at the Future Investment Initiative (FII) Forum in Riyadh, Tony F. Chan said the business of running universities has changed in many ways in recent years as he talked up KAUST’s achievements.

He said that working with FII, KAUST scientists have developed technologies to grow agricultural produce with sea water, and its spin off on the Red Sea farm has acquired $10 million in investment.