The FY14 remittances so far have largely followed the inflow pattern seen in recent years (see illustration). After surging in March, inflows have recorded a month-on-month decline (1.9%) in April. If the trend persists, expect the inflows to dip again in May and recover in June over respective preceding months.
An important highlight of these predictable inflows is the growth they have been handing over compared to last year. As per the SBP data released yesterday, workers’ remittances recorded a 7.89 percent year-on-year growth to reach $1.31 billion in April.
The April growth rate is not encouraging, especially when seven out of ten months this fiscal year have seen double-digit growth in inflows. April’s relatively slow growth brought the cumulative year-on-year growth from 11.87 percent in 9M FY14 down to 11.45 percent in 10M FY14. But still, the Jul-Apr inflows stood at $12.98 billion, which is $1.32 billion more than the same period of last year.
It seems that the decelerating yearly growth in April remittances has something to do with the gradually appreciating rupee throughout the month of March. April data show that remittances from Saudi Arabia and UAE recorded decline of 2.5 percent and 10.7 percent over March. Recall that March inflows from these two countries showed growth of 15 percent and 9 percent, respectively, over February.
‘Other GCC countries’ also recorded a nominal month-on-month growth of 3.4 percent in April. These countries-–Kuwait, Oman, Bahrain, and Qatar-–had previously shown a month-on-month growth of 13 percent in March.
The data seem to suggest that the blue collar workers in the overall GCC region-–where nearly two-third of all overseas Pakistani workers reside and send remittances from-–may be holding back on their remittances in hopes of even-improved rupee parity against dollar in the near future. One must wait for May’s data to find out whether there is merit in this possibility, for April was a month of relative stability for rupee.
Comments
Comments are closed.