5. THE FINANCIAL CRISIS IN THE GULF AND ITS IMPACT ON SOUTH ASIA
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Second Return Migrant Survey, 2009 Return migration from the Gulf is an expected outcome of contract migration. Migrants from South Asia go on contract work to the destination countries, and once the contract ends, they, in the normal course of events, return to the countries of their origin. As of now, we have no estimate of return emigration numbers from the Gulf to South Asia. However, the Centre for Development Studies has completed four large-scale migration surveys (1998, 2003, 2007, and 2008) over the last decade. One of the research objectives of this project is to assess the flow of forced return emigration, that is, return emigrants before the expiration of their work contract from the Gulf region to South Asia. To assess both regular return migrants and the crisis-instigated return emigrants from the Gulf, we revisited emigrant households from the 15,000 contacted for the 2008 Kerala migration survey. We estimated the extent of crisis-instigated return emigrants to Kerala after the revisits. In a later section we apply the same methodology and project the figures to estimate the number of return emigrants from the Gulf to South Asia. In addition, the return migration resurvey of 2009 also estimated the number of emigrants who lost their jobs in the Gulf but had chosen to remain there without returning to their countries of origin. This is new information (“lost job but have not returned”), which will also be generated for South Asia.
Financial Crisis and Growth in the Gulf The global crisis originating in the United States, and spreading to Europe and Japan, has affected the Middle East through a large fall in the price of oil, reversal of capital inflows, depression of property and equity markets, and losses in sovereign wealth funds.2 The effect of the crisis varied across the countries depending on country characteristics, such as a high share of oil exports in total exports, large numbers of reexports, and a sizeable share of services in GDP, especially transportation, trade, hotels, and restaurants. In the region as a whole, growth declined from 5.1 percent in 2008 to 2.4 percent in 2009. Among the oil-producing countries, the sharpest slowdown was in the United Arab Emirates, where the exit of external funds contributed to a large contraction in liquidity, a sizeable fall in property and equity prices, and substantial pressure on the banking system. At the other end of the spectrum is Qatar, which grew by about 9 percent in 2009 (table 5.1). Interestingly, the comparison for the countries shown in table 5.1 of the growth forecast for 2009 and the realized growth shows important patterns. For the developed countries, the contraction forecast and realized hardly shows much of a difference, but the recovery is expected to be quicker. For the South Asian countries as a whole the realized growth is much better than the forecasts, and the recovery is also rapid. The GCC countries show a mixed pattern: Both Kuwait and the United Arab Emirates witnessed contractions greater than the forecasts, whereas the other countries except