How Are Expats Affected by the Recession?

EXPATRIATES

Daily Life in Rio de Janeiro

So, how are expats affected by the recession? Well, it depends on the expat. In our situation, we feel pretty well-positioned. For the time being my husband has job security in that he has a contract for at least the next year, yes our portfolio has taken a hit, but we young, yes his company recently went through a bit of turmoil but it is weathering the storm. 

He makes US dollars and so the weakening of the Canadian dollar is good for us (and good for exporters and most of Canada, too). Our living costs are covered, so fluctuations are not an issue. We feel very lucky. That said, my husband has worked VERY hard and continues to do so. One item we may potentially be affected by in a big way is our home in Canada. We decided to keep it, and my sister and her boyfriend are currently living in it. We said right from the start that we probably would not move back into it once we repatriate, as we may even change cities. We decide then what to do, it is in a very desirable area so renting it out could be a good option. 

Now with the baby coming, moving back into it is looking even less likely. We do like having our stuff stored there and cared for and it is certainly convenient to stay there when we are visiting Canada, also my sister has a great place to live at a significantly lower cost to her than she would find anywhere else. However, being that it was probably worth at least $100,000 more when we left than it is today, we probably should have sold it! 

This week there was an article in the Independent (UK) entitled “Move Abroad to Beat the Recession Blues” – encouraging Brits to move abroad. Interestingly enough, Brazil was the first destination mentioned in the article. Other recommended locales included New Zealand, China, Malaysia, Abu Dabi, Qatar. The article also features a “where not to go” – Spain, Australia, Dubai. I love how articles like this just make it sound so easy. I can see why this article came to be, though. 

It’s tough to beat the expat lifestyle right now. However, it is not all sunshine and rainbows. Other expats are not as lucky as we have been. Some projects are being shut down due to cost cutting, and people are being sent home. It is not surprising, as expats are very expensive for companies. I often joke that shareholders should be enraged, then I am reminded of why we are all here when I hear stories from the offices on a daily basis. 

The International Herald Tribune recently published an article about banking industry expats losing their jobs and being forced to return home. The article discussed the trickle effect of losing these expats. For example, the impact on private schools for their children as this is a very common perk in expat packages. In many cases, whereever an ex-pat resides when they lose employment, they cannot afford to stay in their city as the cost of living is simply too high once they are paying their own costs. This would certainly be the case for us! 

So expats, what do you have to say? How is the recession affecting you? Do you feel more affected or less affected than you would back home? How so? Are you like me and sorry you did not sell your house back home??? We have seen a couple of friends whose projects were cancelled and they were sent back home to other assignments. And other people I been in contact with who were planning to move down, but now their company has cancelled the move. 

The biggest effect we personally are seeing is that the chance of us extending our contract down here (which goes until the end of 2009) is getting slimmer as the company is looking to cut back on us expensive expats! And while we love to have an extra year or so here, moving back sooner makes for some very excited grandparents-to-be.

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Interesting post. I am a different kind of expat, down here on my own rather than sent by a US company. So the situation is different in a lot of ways. For me, the negatives have been losses in the stock market and a lower interest rate on my savings, but I am young enough to ride out the stock losses. The recession has not hit Chile as much yet. I think that a perk of being an expat is that I am hearing how bad things are from friends at home, so I am mentally prepared for things to get worse here. I have heard some Chileans say that the economy “did not get that bad”, as if it were all over now. 

One thing I have heard is that Chile exports, specifically copper, will probably protect the economy and prevent the levels of recession that are currently affecting other countries. And of course holding onto or looking for a job here right now is easier than in the US, although it remains to be seen how that changes over the next few months.

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When we moved here, we transferred a significant amount of money with us to buy a car, furniture, appliances, etc. The exchange rate was 1 USD/1.71 BR. When we move back to the US, we intend to move our money (including savings of what my husband was paid while working here) with us. Today the exchange rate is 1 USD/2.38 BR. If things stay the same, we will take a significant hit! But, such is the exchange rate game. If the rates were reversed, we would be making a lot of money off the deal! But since we earn 12% interest per year on our CHECKING account here in Brazil and 0.9% interest on our SAVINGS account in the US, it is also tempting just to leave our money here until the exchange rate is more in our favor.

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I can say I am in a very comfortable position for the next 2 years, as I am a Brazilian expat in Kuwait for an European company. When I left Brazil (to Angola), the exchange rate was 1US$ aprox. 2.15R$, almost 3 years ago. When the US$ went to 1.6R$, I was almost leaving the company to come back to Rio. At that time I was in Tunisia, and the living allowance could not be converted from local money to US$ or Euros. It was a tough time. Now I just signed a 2 years contract to Kuwait.

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The crisis helped my salary go up, but you are right about projects getting postponed or canceled. And there is also a different movement on the projects that are still running. Most of my European colleagues in Tunisia came back to their home countries without being replaced by new expat contracts. They cost at least 30% more than South American Expats. In Tunisia, I was the only one from South America. We also had one Indian guy and more than 40 Europeans.

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In Kuwait we have 15 Europeans, 10 Indians, some Pakistanis, some Egyptians, one South African and 5 South Americans. And some positions are now open for local hire. This picture makes me see that some high qualified third world expat worker is slowly replacing a lot of jobs that before were given to Europeans and North Americans, especially in the area of middle management. But I am sure the top layer of management will survive the crisis as if it had not existed.

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Nice entry – I don’t know if I qualify as an expat as I am an American with a permanent residence card in Brazil. When we came here 6 years ago, the exchange rate was almost 4 to 1. We brought in just enough money to buy a small apartment and kept the rest of our funds invested in stocks and in our Houston home. So our apartment for now is a good investment and the house in Houston is rented for additional income so the arrangement is also working for us. 

But our ages make our debacle in the stock market pretty bad as we may not live long enough to see the stock portfolio regain the original value (not the inflated one, but the original value of our irreplacable retirement funds). For all of you young expats, it is a good thing to hold onto your home at HOME even if you don’t plan on going back to it. The property still remains a home base if you need it, and will over time (historically 7 years) regain its value as long as it is well maintained.