Expatriate workers wired home a record 739.4 million dollars last month, but experts warn job losses from the global credit crunch could soon slash remittances and rock the economy. Pakistanis working overseas sent 5.66 billion dollars home during the first nine months to March 31, 20 percent up on the same period last year, said State Bank of Pakistan.
Remittances in March surpassed the previous monthly record of 673.5 million dollars in December 2008 and clocked up a significant increase from expatriates working in the Gulf countries, it added. Pakistanis in the United Arab Emirates (UAE) sent back 175 million dollars, up from 112 million dollars in March 2008, and 151 million from Saudi Arabia compared to 120 million dollars in the same month last year, it added.
"The increase will certainly help our foreign exchange reserves to grow but we should not be happy," independent economist A.B. Shahid told AFP. Pakistan's economy relies heavily on its roughly four million expatriates - around two million in the Gulf and the rest divided largely between Britain and North America.
Their remittances account for 4.4 percent of Pakistan's gross domestic product and the 5.66 billion dollars paid so far this fiscal year make up around half the country's foreign exchange reserves of 11.22 billion dollars. But thousands of Pakistani workers have lost jobs, mainly in the Gulf. Low-paid Asian workers have fallen victim to the global credit crunch as companies run short of business and money.
A report published in the UAE in February showed that 582 billion dollars worth of building projects (45 percent of the total) had been put on hold due to the slowdown. "Our exchange reserves will remain healthy this fiscal year but next year a decline in remittances will certainly hit us," Shahid said.
Most Pakistanis are unskilled workers associated largely with construction, transport and civic services such as sanitation in the Middle East. The ruler of Dubai, Sheikh Mohammad bin Rashed al-Maktoum, acknowledged this month that economic growth in the UAE would probably fall to around three percent in 2009, down from 7.4 percent last year.
Private recruitment companies say the slowdown means fewer jobs. "We had long queues of people wanting to go to the Middle East last year but now their number has declined significantly," said Illahi Bakhsh, owner of the Personnel Services Bureau, one of hundreds of Pakistani recruitment companies.
The economic downturn has closed scores of industrial units in Pakistan, rendering thousands unemployed. Soaring at 20 percent, inflation is hammering the ordinary man on the street and squeezing prices. Wilting under extremist attacks and a fragile economy, the International Monetary Fund agreed last November to give Pakistan a 7.6 billion dollar loan to avoid a balance of payments crisis.
Analyst Rauf Nizamani believes there is some hope provided returning workers invest their cash in small businesses. "They could still contribute to the economy if they invest in small businesses and not use the money on private consumption."
Businessman Majyd Aziz was optimistic, noting that people were increasingly sending money home officially rather than through backhand channels. "Certainly, Pakistanis and other Asians are suffering lay-offs but our remittances have also increased because most Pakistanis now use official channels instead of hundi," he said.