Against the expectation amid the coronavirus pandemic, official data by SBP shows that remittances in the country for March 2020 were up by almost 9 percent year-on-year, while the month-on-month growth stood close to 4 percent. Growth in March contributed to overall 9MFY20 remittances that climbed by 6 percent year-on-year.
But that’s where the bad news for remittance flow in the country begin. Chinks have started appearing in the long-resilient home remittances. The situation has gone from bad to worse from the last time the section talked about remittances in the country as employment prospects in source countries become a nightmare. (Read: Remittances in danger? – published on March 19. 2020).
The growth seen in March could be the last for at least sometime. Channel checks by Br Research reveal that the growth in March 2020 remittances was primarily due to the strong inflows in the first 17 days of the month partly due to key incentives by the government and partly in anticipation of Ramadan. However, inflows have seen a significant shrink after March 17, as the virus became more aggressive at home as well as key destinations of expatriates, which also suggests that there might be no rebound in April due to Ramadan as many are hoping. There are talks of a likely drop in remittances by over $1-1.5 billion annually if the pandemic is not controlled.
Global economic activity has come to a halt; businesses are closing down; investments are being postponed; employment prospects are bleak. The world could just be slipping into a global recession. Remittances flows around the world are on their way down as COVID-19 take charge of economies around the globe Significant impact is expected on recipient developing economies as coronavirus cases and layoffs surge in richer countries.
Layoffs are already happening in the GCC countries as strict lockdowns have brought the construction, tourism and services industry to a standstill, and falling crude oil prices would only extend the cuts in government spending. The situation in other countries for expats like US and Europe is even worse.
Global analysts are also warning of a big shock for economies that rely heavily on remittances, including Pakistan on two fronts: decline in foreign exchange inflows that came in as remittance receipts and the increasing burden of unemployment of returning workers.