KOCHI: The spike in crude oil prices by 65 per cent since last June to $75 a barrel has spurred hopes of expatriate Keralites that the slowdown in the West Asian economies may be coming to an end and the job market there will spring back to life again.
But experts said the surge in oil prices was a temporary phenomenon, the localisation of jobs and higher taxes for overseas workers will continue to drive away expatriates, hitting the remittance-driven Kerala economy.
"Saudi Arabia is planning what would likely be the world's largest IPO for Saudi Aramco (the country's national petroleum and natural gas company) to raise $100 bn. The oil prices are kept higher to ensure good valuation for it," reckoned V K Vijayakumar, investment strategist at Geojit Financial Services. "The higher oil prices is a temporary phenomenon," he said, adding it will ease after the IPO.
According to estimates, every $1 rise in the average price of oil this year would tend to improve Saudi Arabia’s budget position by roughly $2.1 billion while three countries --- the UAE, Kuwait and Qatar --- are probably heading for budget surpluses this year at current oil prices.
Crude prices, which hit a high of $140 a barrel in 2008, has been heading south since. It touched a low of $43-44 a barrel in 2015, badly affecting the health of the West Asian economies, which in turn led to job losses, mostly in construction and oil sectors.
Vijayakumar said the sudden spurt in oil price is also partly due to buoyancy in the world's leading economies. "The US reported an unemployment rate of 3.9 per cent, the lowest in 40-50 years, and the global growth at 3.7 per cent is forecast to grow even higher at 3.9 per cent in the coming year," he said.
Centre for Development Studies professor S Irudaya Rajan, who has studied migration of Keralites to other parts of the world, especially the Gulf, over several decades, said during his recent visits to Qatar and Abu Dhabi, he could notice people, especially Malayalees, are returning back to Kerala after losing their jobs.
"The higher oil prices can bring some relief to those economies, but long-term trend will be that the stock of people from Kerala will decline in the Gulf region," he said. "The fact remains that we don't have enough people here," Rajan said, pointing out this was the reason for Kerala itself attracting people in migration-prone age group of 20-29 from UP, Rajasthan, etc.
Vijayakumar of Geojit said "screws are being tightened" for expatriates working in the West Asian countries, hitting the nearly 2.4 million Keralites living there. "In fact, new taxes are imposed on expatriates. So, the screws are being tightened, and I expect the situation to become tougher rather than easier, even if the oil prices remain high," he said.
NRI deposits in Kerala banks
December, 2017: Rs 161499.81 cr
September, 2017: Rs 157926.03 cr
June, 2017: Rs 154252.58 cr
December, 2016: Rs 148073.85 cr
Source: SLBC