How Gulf remittances help cushion the impact of sudden income losses

Gulf countries rank among the world’s top ten economies for per capita remittance outflows. New research by Dr. Ludovica Ambrosino of the London Business School and Dr. Aditya Soenarjo of the Federal Reserve Bank of Boston indicates that these financial transfers serve as a critical buffer against sudden income losses. Analyzing over 150 million transactions between 2014 and 2023, the researchers found that remittance flows increase by 31 percent in the first week following a major natural disaster. The authors argue that this form of support is more dignified and effective than traditional foreign aid, as it empowers beneficiaries to manage their own financial needs. The study attributes the scale of these remittances to the Gulf's open labor markets, high earning potential, and the ease and speed of capital transfers.