The central bank data reveals that remittances experienced a 24 percent year-on-year growth in October 2024. The upward streak in remittances has continued in monthly inflows, with double-digit year-on-year growth in all the months of FY25. The month-over-month trend in remittances shows that since July 2024, these inflows have hovered around $2.7 to $3 billion monthly. And remittances in the latest month—October 2024—have hit a four-month high to $3 billion—rising by 12.6 percent month-on-month.
For the first four months of the fiscal year (4MFY25), cumulative remittances totaled $11.04 billion, representing a year-on-year increase of 24 percent. This substantial growth offers some respite amid Pakistan’s ongoing economic challenges, including a high inflation rate and pressures on foreign exchange reserves.
Remittances have also been offsetting Pakistan’s trade deficit and stabilizing its foreign exchange reserves. With remittances hitting record levels, what’s driving this surge, and can Pakistan maintain this momentum? Factors that have been driving growth in remittances in recent times include a stable currency relative to previous times, a narrowing gap between open market and interbank rates, and a rise in the number of workers migrating abroad. Seasonal factors and increased outflows from expatriates anticipating local expenses and upcoming financial needs in Pakistan could also account for the surge in remittances.
Breaking down remittances by source country, Saudi Arabia led with $690 million in October alone, highlighting the significance of the Middle East as a crucial contributor to Pakistan’s remittance inflows. The United Arab Emirates (UAE) followed with $562 million, while inflows from the United States and the United Kingdom reached $454 million and $412 million, respectively. These countries collectively form the backbone of remittance inflows, reflecting the strong ties of the Pakistani diaspora with their home country.
The consistent growth in remittances will be crucial for Pakistan. That is why the government may consider further facilitating these inflows by enhancing banking services, improving the ease of money transfers, and providing incentives for overseas Pakistanis to send money through formal channels. That said, inward remittances may have reached their peak, at least in the short term; these inflows might hover around the $3 billion mark in the remainder of the fiscal year. Nonetheless, FY25 remittances would stand tall—depict significant growth over FY24.
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