Migration Response to Oil Price Volatility: A Dynamic Simulation of Migration from South and Southeast Asia to the GCC

The possible end of the commodity price super-cycle could entail low oil prices for several decades to come affecting growth in many economies. Net oil importers in South and South-East Asia could benefit from lower intermediate inputs and higher real incomes. Yet they could also experience lower remittance flows due to fewer migrants being demanded by the GCC, where potentially lower labor demand due to low oil prices dampening welfare prospects in the migrant-sending countries due to loss of remittance income and lower domestic wages. Indeed, it is possible that faster economic growth in the migrant-sending countries may also reduce the push factors to migrate. Keeping in mind the threat of lower remittance income to development prospects in these Asian economies, a scenario analysis finds that low oil prices provide a net benefit to South and South-East Asian migrant sending countries over the next 15 years. This is because of the boost to domestic production through lower inputs costs. The anticipate welfare loss due to lower migration flows to the GCC are found to be modest in the long term due to the relatively robust migration flows; most Asian economies maintain stable migrant flows into the GCC region.