UAE expats fear lower oil prices could see drop in remittances
ABU DHABI // Expatriates believe that the amount of money they send home could soon be affected by low oil prices.
A report by the World Bank recently showed that the remittances from Gulf countries to the South Asia region have increased substantially in this financial year.
Those to Pakistan from the UAE rose by 34 per cent to about Dh15.4 billion between July last year and this July, when compared with the same time the financial year before.
But the report warned that if lower oil prices persisted and “economic activity in GCC countries declines” then “outward remittances from these countries may eventually decline”.
While expatriates continued to send money home, they said they were aware they might have to decrease the amounts.
Shahid Khan, 40, a Pakistani who lives in Dubai, said: “With the fall in global oil prices, companies are cutting their costs, which will eventually hurt salaries and bonuses.
“As a result, we not only have to cut the amount that we send back home but also make a lot of compromises in our lifestyle here in the UAE.”
Another Pakistani, Yasir Imtiaz Awan, 32, said that for the time being he would continue to send the same amount of remittances home as usual.
“It won’t affect the micro level as most of us have to support our families back home,” said Mr Awan, a banker in Dubai, who sends about Dh1,700 to his family every month.
“I feel that after some time we will be spending most of our salaries here because of rising inflation rather than sending money back home.”
Promoth Manghat, the chief executive of the UAE Exchange, said remittances may soon fall.
“GCC economies are predominantly dependent on oil. So, if lower oil prices persist it could eventually hit remittance flows,” he said.
“Hence, caution is essential – but so is optimism. Increasingly, GCC economies are trying to reduce this oil dependency and exploring alternative sources of wealth creation. They are diversifying well, which is a positive way of finding a solution.”
K V Shamsudheen, director at the Barjeel Geojit Securities in Dubai, dismissed the claims of decline in remittances.
He said Gulf nations’ economies would continue to grow, hence the sustained demand for expatriate labour on construction projects.
“Most of the projects were announced after the oil crisis. The cost of these is more than US$100 billion (Dh367bn). These grounds mean remittances to South Asian countries will grow further,” he said.
Updated: November 6, 2015 04:00 AM