Remittances drop after reaching all-time high in 2019

Despite rising popularity, Jordan’s Central Bank doesn’t seem likely to budge on its crypto ban. (Photo: Jordan News)
Despite rising popularity, Jordan’s Central Bank doesn’t seem likely to budge on its crypto ban. (Photo: Jordan News)
AMMAN — After reaching an all-time high of $3.7 billion in 2019, remittances coming from Jordanian expatriates have dropped significantly as a result of COVID-19 and the disruption that took place in the global economy, according to data from the Central Bank of Jordanاضافة اعلان

The continuous inflow of expat remittances is vital to the overall health of Jordan’s aid-dependent economy. According to an article by Reuters, remittances compromised 10 percent of the country’s GDP. Many Jordanians, struggling with unemployment in the Kingdom, have historically found refuge in higher-paying jobs in the Gulf that allow them to send funds back to family at home.

General Manager of Specialized Leasing Company, which is part of the Housing Bank Group, Amjad Al-Sayeh, told Jordan News that local businesses have been affected as a result of the drop in remittances.

“Cash flow is vital to the health of any economy. Jordan already struggles from a problem in cash liquidity,” said Sayeh. “Remittances coming from expatriates were keeping us afloat, especially for us who work in housing, an industry that is highly dependent on money coming from Jordanians abroad.”

The decrease in expats’ remittances to Jordan, which was estimated to be 9.8 percent by the end of 2020 according to the Middle East Monitor, compared with the 2019 value, has been attributed to the global economic recession, driven by COVID-19. The recession took its biggest toll on rentier economies — economies that derive a substantial portion of their wealth from foreign investment.

Saudi Arabia, a rentier economy and the largest source of personal remittances to Jordan, according to a report issued by the Jordan Strategy Forum in 2018, was forced to lay off tens of thousands of their workers, many of whom were Jordanian expats. Reuters has linked these lay-offs to the drop in remittances to Jordan.

A local professor at the Al-Hussein Technical University told Jordan News how her family was impacted first-hand by the decline in personal remittances coming from Saudi Arabia.

“My husband works in a government-owned petroleum company in the neighboring Gulf country. A big percentage of our personal spending as a family is dependent on the money he sends us,” said the professor, who asked to remain anonymous. “While he was not laid off like many others, he still had to endure continuous postponements in salary payments. Last year was very tough for us.”

In a phone interview with Jordan News, president of the Jordan Society of Investment’s housing section, Kamal Awamleh, similarly spoke on the impact of the decline in remittances on his sector.

“Percentage wise, 25 percent of cash flows coming from expatriates go into the housing industry in the form of purchase of property,” he said. “We were able to witness first-hand the steep decline in remittances coming in last summer, where demand for property did not increase as much as it usually does during the summertime.”

But Awamleh was optimistic that the downward trend in remittances would soon shift. “With borders opening up, and the economies of our two biggest sources of remittances — Saudi Arabia and United Arab Emirates — entering the recovery phase as oil prices rise, we feel very optimistic that the numbers will eventually return back to their pre-pandemic levels.”

Kamal’s statement is backed by data on the Trading Economics website. After dropping to a low of JD466.7 in Q3 of 2020, remittances in Jordan are on a slow but steady increase, reaching JD498.8 in Q1 of 2021, a 6.4 percent increase.

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