Remittances to Pakistan have been on a constant uptrend - continuing to cool down a heated economy. Remittances have always played the role in supporting the economy. But this time, the elevated levels are historic. The growth largely picked up at the beginning of the pandemic, and while there have been various reasons cited such as people sending back more money home, wrapping up savings abroad, and people returning home after losing jobs, the primary reason for the sustained elevated trend in remittances has been the incentivizing of formal channels and digitalization in remittances during COVID.
The upsurge in remittances continued in September 2021 as the monthly flows remained above $2 billion for the 16th month in a row and above $2.5 for the seventh straight month. At $2.7 billion, September 2021 remittances were flat month-on-month but up by 16.9 percent on a year-on-year basis.
On the whole, remittances increased by 12.5 percent year-on-year during the first quarter of FY22 (1QFY22). At $8 billion, remittances for the first quarter are the highest ever in the country’s history. The majority of the remittances continue to come from the four key destinations for the expats: Saudi Arabia, UAE, UK, and the US, while another significant chunk comes from other GCC countries and Europe. This trend has been holding up during the pandemic as well. During 1QFY22, where inflows from expats in Saudi Arabia depicted a slowdown of 2.6 percent year-on-year, remittance flows from the US and the UK grew by 32 and 13 percent respectively. Remittances from the UAE, the other GCC world, and the EU were also up by 8.7, 12.3, and 48 percent year-on-year, respectively.
September has been pleasantly upbeat for remittances as it was feared that the situation in Afghanistan could impact the flows. Forecasts show that the continued growth in remittances at the same pace could help the country cross the $31 billion tally for FY22, while the projections for the 2021 calendar year are also upbeat at $30 billion.
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