Remittances for March 2022 touched the highest ever monthly level of $2.8 billion. This is an increase of over 28 percent month-on-month as the monthly inflows continued to remain above $2 billion mark. Rise in remittances particularly in March is a breath of fresh air as the current account has been under pressure due to massive oil price increase.
While remittances in March 2022 grew by 3.2 percent year-on-year, month-on-month growth in the foreign inflows was largely attributable to e seasonal uptick. Remittances from overseas Pakistanis ahead of as well as during the Holy month of Ramzan are always higher as money is sent home for donation, charity, Zakat, Eid festivities, etc. This increase in monthly inflows is always experienced a month before Ramazan and also during Ramazan, which is usually followed by a slowdown in the following month.
Overall, remittances in 9MFY22 have also touched record levels of $22.95 billion, with a growth of 7.1 percent higher than the same period last year. Contributions from the countries remain tilted toward Kingdom of Saudi Arabia, UAE, UK and USA. However, growth is particularly seen in inflows from USA and the UK at 21 and 10 percent respectively. On the other hand, growth in inflows from Kingdom of Saudi Arabia and UAE for 9MFY22 stood at 1.24 and -5.2 percent, respectively.
Overall the remittances remain resilient in that they remain above the psychological threshold of $2 billion every month for almost two years now. It is anticipated that the inflows will cross $30 billion mark at the end of FY22. However, when compared to FY21, the growth in FY22 has definitely slowed down. Though the remittances have been growing phenomenally over the last two years primarily since the beginning of the global pandemic due to the (previous) government’s 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, there are also expectations of a slowdown as travelling is opening up and restrictions easing.
The real picture will be evident after Ramazan where political uncertainly in recent times could also affect some foreign currency coming in.
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