Worker Exodus Due to War Threatens Asia with Remittance Crisis
Geopolitical conflicts in the Middle East region are beginning to create a domino effect on Asia’s economy, particularly through migrant workers and remittance flows.
The war involving Iran, Israel, and the involvement of the United States in the Gulf area has triggered a massive wave of returning Asian migrant workers. This phenomenon has the potential to worsen economic pressures in the workers’ home countries, amid a surge in global energy prices due to the prolonged conflict.
Wave of Returning Migrant Workers
The Gulf Cooperation Council (GCC) region has long been the primary destination for workers from South Asia and Southeast Asia. In 2024, more than 20 million workers from those areas are recorded as working in Gulf countries, a figure 65% higher than in 2010.
However, the escalation of conflict has led many companies to halt operations and new recruitment of workers. As a result, thousands of migrant workers have lost their jobs and are forced to return to their home countries.
The number of Bangladeshi citizens granted migration permits to Gulf countries dropped drastically to 31,279 in March, from 92,460 in the same month last year. The Nepalese government has even temporarily halted the issuance of new work permits for security reasons.
Remittances as an Economic Pillar Begin to Wobble
The decline in the number of migrant workers directly impacts remittance flows, which have long been one of the main sources of foreign exchange for many developing countries in Asia.
The contribution of remittances to the economies of several Asian countries is significant. In Bangladesh, remittances reach around US$32 billion, equivalent to 6.5% of GDP.
Meanwhile, in Nepal, its role is even more dominant, contributing nearly a quarter of the country’s total GDP. In India, although its economy is much larger, remittances still contribute about 3.5% to GDP.
According to analysis from economic research institutions, a 1 to 2% decline in economic growth in Gulf countries could trigger a 5% drop in remittances.
This situation risks pressuring household consumption, worsening poverty, and disrupting domestic economic stability. The World Bank warns that GCC countries are at risk of experiencing such a contraction this year.
Double Pressure: Energy and Income
Countries that are highly dependent on remittances, such as Bangladesh, Nepal, and the Philippines, now face double pressures. On one hand, energy prices are rising due to global supply disruptions. On the other hand, income from remittances is declining.
This creates layered impacts such as increased living costs, weakened purchasing power, and risks of economic slowdown.
Furthermore, remittances have long been used to fund education and improve workforce quality. A decline in these fund flows could hinder social mobility in the long term.
Amid uncertainty in the Middle East, several countries are beginning to seek new alternative destinations for migrant workers. Countries like Japan and South Korea are being considered because they offer higher salaries and better working conditions.
In addition, Southeast Asian regions such as Malaysia and Thailand are also quite potential options. One concrete step is seen in Malaysia’s decision to reopen its labour market to Bangladeshi workers after it had been closed for two years.
This policy is expected not only to add job opportunities but also to reduce the risk of exploitation of migrant workers through inter-country cooperation.
Although new opportunities are opening up, shifting migration destinations cannot be done instantly. Migration routes to the Gulf region have been established for decades with support from agent networks, recruitment systems, and strong social connections.
In contrast, new destination countries have various barriers such as strict immigration policies, limitations on accepting foreign workers, language barriers, and skill requirements.