The significance of remittances never declines for Pakistan, and substantial hopes are pinned to these foreign inflows when the current account is in trouble – which will come under pressure much more in March 2022 when oil prices increased by more than 30 percent in less than 10 days.
Remittance for February 2022 as per the latest SBP data were up month-on-month by two percent but were down by 3 percent year-on-year. The space has been highlighting the slowdown in remittances as evident from the monthly tally over the last few months. Though the remittances have been growing phenomenally over the last two years primarily since the beginning of the global pandemic due to government 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, this space has argued that many of these factors were temporary. This can be seen as slowdown is evident from travelling opening up and restrictions easing.
Nonetheless, the upward momentum in home remittances continues with 8MFY22 aggregate at all-time high of $20 billion up by 7.65 percent year-on-year. Remittance from key destinations such as Kingdom of Saudi Arabia, and the UAE that have slowed down over the past 5-6 months to record low have risen in Feb-2022. Overall in 8MFY22, remittances from Saudi Arabia grew by two percent year-on-year, while they continued to decline from UAE at 4 percent year-on-year. Growth in overall remittances has largely come from double digit growth from the western world including UK and the USA. In 8MFY22, remittances from USA and the UK were up by 18.2 percent and 10.3 percent, respectively.
Overall the remittances remain resilient in that they remain above the psychological threshold of $2 billion. Remittances have slowed down all over the world due to travel resumption, which was expected. With Saudi Arabia also open for Umrah, remittances could see some more declines in the year ahead.
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