With hopes of economic revival still distant as exports continue to paint a dreary picture, banking on remittances to provide some guaranteed foreign exchange inflows isn’t overstressed. As per the latest central bank data, home remittances for FY19 stood at $21.842 billion, up by 9.68 percent year-on-year.
Remittance from overseas Pakistanis for June 2019 came at $1650 million, very close to what this space had estimated last month. (Read: Betting on remittances, published on June 19, 2019). While the year-on-year growth for June inflows has been flat, the month-on-month shows a decline of 29 percent, which was expected as May 2019 brought increased inflows on account of Ramazan and Eid-ul-Fitr.
https://www.brecorder.com/2019/06/19/503957/betting-on-remittances/
A look at central bank’s data shows that while remittances a chunk of growth continued to come from the Saudi Arabia and UAE, their share in total remittances has been on a decline for reasons discussed at length in this space. On the other hand, share of the western countries in total remittances has been climbing despite the not-so-friendly bilateral relations between them and Pakistan.
An important point to highlight here is that despite the declining stock of immigrant workers in key remittance corridors like Saudi Arabia, UAE and the other GCC countries, remittances from these countries have shown growth in FY19 versus a decline in FY18. Sources highlight that that the growth has been salvaged due to increased PRI activity; there has been a marked conversion of informal remittance to formal inflows due to PRI’s marketing initiatives, the incentive schemes to exchange companies, and constant interactions and awareness campaigns in the labor camps in these corridors.
Remittance will remain crucial for the economy. Sanguine growth is expected in July 2019 on account of Eid-ul-Azha in early August 2019. Soon the State Bank of Pakistan will release the official target for FY20; a growth rate of 5-7 percent is something that is being expected. Whereas, IMF’s projections in the latest staff report for Pakistan show a growth of 3.2 and 4.8 percent for FY20 and FY21, respectively.