The first two months of FY23 have posted a decline of 3.2 percent year-on-year. After a weakJuly, August 2022 inflows were also down by 1.5 percent year-on-year – although remittances were seen growing by almost 8 percent on a month-on-month basis in Aug-22.
Decline in remittances in July 2022 month-on-month was due to lessernumber of days as highlighted by the central bank last month. However, August saw improvement in August remittances which was due to return of business and working days. Back in FY22, remittances posted record growth with over $31.2 billion inflows cent year-on-year and crossing the $30 billion mark for the first time with over $2 billion remittances every month. In that respect, remittances continued to post over $2 billion in remittances in July and August 2022.
Despite the recent monthly slowdown, remittances have been growing phenomenally over the last two years primarily due to the incentives to formalize the payment channels as well as the global and country dynamics in terms of travel restrictions, money transfer, FATF efforts, layoffs and lockdowns, currency depreciation, and fiscal stimuli in the host and countries.
Remittances to Pakistan continued to be led by inflows from Kingdom of Saudi Arabia, United Arab Emirates, Unite States of America and United Kingdom. Rising oil prices in the gulf region have kept economies as well as inflows from these countries buoyed. However, a key factor for decline in remittances especially from the western countries has been the rising inflation. And while inflation in US has eased somewhat, the economic crunch in the UK and the US threatens remittances inflows from these major destinations in the coming months.
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