The Iran conflict has put the Gulf's USD 124 bn remittance machine under strain — and workers’ savings buffers are running out

The Gulf's USD 124 bn remittance machine is wobbling. The Iran conflict is stress-testing one of the world’s most consequential capital flows — the money sent home by roughly 30 mn foreign nationals working across the six GCC states. Bloomberg reports that GCC migrant workers sent an estimated USD 124 bn home in 2024 — and the early data from this year suggests the flow is under real strain for the first time since the pandemic.

We could be looking at a serious collapse in remittance volumes if foreign workers’ savings are depleted, potentially by 3Q 2026, due to a prolonged war, Daré Okoudjou, CEO of cross-border payments platform Onafriq, estimates. Around 40% of senders are already drawing from emergency reserves for the first time since the 2020 pandemic, Okoudjou adds.

The war’s opening weeks triggered a panic-send: Western Union reported an acceleration in outbound remittances from the Middle East during the early phase of the conflict, and the Central Bank of Kenya logged a surge as some 500k Gulf-based workers rushed money home at the onset. In India — where the UAE alone accounts for about one-fifth of all inward remittances — money sent home by overseas workers rose more than 28% in the three months through March. Bangladesh and Sri Lanka also reported increases.

Then came the hangover: Kenyan transfers from the Gulf states fell 18% in April. Philippine remittances grew at their slowest pace in almost four years — a warning sign for a country where inflows amount to about 10% of GDP and around 2.4 mn citizens work in the Middle East.

The savings buffer is the number to watch. Okoudjou says transaction volumes have risen, but the average transfer values have dropped about 12%, with wage delays — and in some cases cuts — pushing workers to draw from reserves.

It’s not just Okoudjou with the bearish outlook — Western Union CEO Devin McGranahan flagged the same bleak outlook on an earnings call in late April, explaining that prolonged conflict historically means less migration into the region, fewer economic prospects, and a gradual shrinkage of overall outbound volumes.

What to watch: How the US-Iran peace talks go over the next 60 days will play a huge role in remittance recovery, as the restoration of a sense of security and stability in the region will help its tourism, hospitality, and other industries begin a long road to recovery.

MARKETS THIS MORNING-

Asia-Pacific markets are down in early trading this morning, echoing a selloff seen on Wall Street on the back of expectations that the Fed may press ahead with aggressive monetary tightening later this year. South Korea’s Kospi is down 4.2%, while Japan’s Nikkei is down a more moderate 1.1%.

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 9.3 bn (7.1% above the 90-day average). Local investors were the sole net sellers. The index is up 25.7% YTD.

In the green: GB Corp (+7.9%), Qalaa Holdings (+3.0%), and Telecom Egypt (+2.3%).

In the red: Abu Qir Fertilizers (-4.1%), Kima (-3.3%), and Emaar Misr (-2.9%).