The need for overseas Pakistanis to send in remittances is never overestimated in Pakistan as there never is a time when the country is not struggling with uncertain economic growth, recurrent trade deficits, energy shortages, heightened foreign debt repayments, and continuous balance of payment crises. Therefore, remittances sent by Pakistani emigrants and labor migrants continue to represent a key source of income in the country. In the ongoing year (FY24), the remittance flows have continued to play this role as the country’s economy fell into a growth crisis and foreign exchange reserves shrunk.
During April 24, remittances grew by 28 percent year-on-year to touch $2.8 billion as per the State Bank of Pakistan’s latest data. The April 24 tally was the second highest monthly inflow since August 22 – the other being $2.9 billion in the previous month, March 24. Cumulatively, remittances in 10MFY24 were seen rising albeit modestly by 3.5 percent year-on-year, taking the total to $23.8 billion. This growth is better than 9MFY24 growth where the remittances rose by less than one percent year-on-year and particularly weak 1HFY24 inflows.
Disaggregating remittances data shows that remittances to Pakistan come mainly from the Gulf the US, and the UK. Over the years, the trend has remained the same as most emigrants and labor migrants are from these three key regions. In the Gulf region, Saudi Arabia has been the main contributor to remittances, though the overseas residents have faced various challenges in recent years due to the country’s nationalization strategy as well as fluctuating oil prices and production. However, it is still the primary source of inflows with a 24 percent share in total remittances in FY23 and 10MFY24. The United Arab Emirates (UAE) and the UK ranked second and third, respectively in 10MFY24 – following the ongoing trend - with a share of 18 and 15 percent during the period respectively. These three countries followed by the US are the top four countries with Pakistani diaspora.
While the crackdown against the grey channels has played an important role in keeping official remittances in place, the growth in remittances in the last couple of months has also been led by Ramadan and Eid-ul-Fitr falling in these months where more and more people send money back home to their families, for charity, etc. Remittances flows in the remaining two months are likely to remain on the higher side as well as soon inflows will start pouring in for Ei-d-ul-Azha where overseas Pakistanis usually send money for sacrificial animals and related festivities. In such a case, $29 to $30 billion in remittances for FY24 won’t be an overestimation. That’s a growth of somewhere between 6-9 percent year-on-year.
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