EDITORIAL: Pakistan’s overseas workers’ remittances have done it again. At $41.6 billion in FY26, inflows reached another all-time high, rising nearly nine percent over the previous year.
The milestone is significant not merely because of its size, but because it reinforces a trend that has quietly reshaped Pakistan’s external sector over the better part of a decade.
In just seven years, remittances have nearly doubled. Over the same period, merchandise exports have struggled to escape a narrow range, exposing a profound imbalance in the country’s external account.
For years now, remittances have been Pakistan’s saving grace. They have financed imports, supported foreign exchange reserves, eased pressure on the rupee and, perhaps most importantly, sustained millions of households. Behind every monthly record lies a far less glamorous story of overseas Pakistanis paying school fees, buying groceries, covering medical bills and helping families navigate an increasingly expensive cost of living. It is consumption that these inflows primarily finance, not investment. That reality should shape both the government’s narrative and its policy response.
Credit must be accorded where it is due. The authorities deserve recognition for their sustained crackdown on hawala and hundi networks and for making formal remittance channels more accessible and attractive. The shift from informal to documented transfers has undoubtedly contributed to the remarkable growth in official inflows. Organic growth has played its part as well, with hundreds of thousands of Pakistanis continuing to leave each year in search of employment abroad. The combination has produced a dividend that few would have anticipated only a few years ago.
Be that as it may, the temptation to portray record remittances as evidence of rising investor confidence or broad-based economic optimism should be resisted. Workers’ remittances are not portfolio inflows, nor are they foreign direct investment. They represent the earnings of Pakistanis working overseas who continue to support their families back home. That distinction matters. It keeps the discussion grounded in economic reality rather than political messaging.
There is another uncomfortable truth that deserves greater attention. The success of remittances has, to some extent, masked Pakistan’s persistently disappointing export performance. Despite years of concessional financing, preferential tariff regimes, subsidised energy packages and various export promotion schemes, merchandise exports have failed to exhibit the sustained dynamism required of an economy of Pakistan’s size. It is difficult to escape the conclusion that remittances have become the country’s most reliable export, with its people emerging as Pakistan’s largest export commodity.
That is hardly a sustainable development strategy. An external account built increasingly around remittances is inherently vulnerable. A substantial share of Pakistan’s inflows originates from the Gulf, leaving the country exposed to economic cycles, labour market reforms and geopolitical developments in a single and; of late, a volatile region. Recent events have, if anything, demonstrated both the resilience and the unpredictability of these flows. Remittances from the UAE remained robust, aided in part by Pakistanis repatriating lifetime savings or returning home following regional tensions. But exceptional circumstances should not be mistaken for permanent trends. The Middle East is today among the world’s most geopolitically fragile regions. A prolonged conflict, economic slowdown or structural changes in labour demand could quickly alter the remittance landscape.
The prudent response, therefore, is not complacency but diversification. Pakistan should certainly continue facilitating overseas employment, reducing transaction costs and encouraging formal remittance channels. Those gains are worth preserving and pursuing. Yet equal urgency must now be directed towards the other side of the external account. Goods exports have remained stubbornly subdued for far too long despite repeated policy interventions. If the same level of institutional focus devoted to documenting remittances were applied to improving export competitiveness, reducing logistics costs and broadening the industrial base, the economy would be considerably more resilient.
There is much to celebrate in FY26’s remittance performance. It reflects the sacrifices of millions of Pakistanis working far from home and the policy measures that have made formal transfers more attractive. But celebration should not give way to complacency. Record remittances have bought Pakistan valuable breathing space. They should not become an excuse to ignore the country’s underperforming export sector. The real test of economic policy lies not in how effectively it counts money sent home by its diaspora, but in how successfully it enables businesses at home to earn foreign exchange on their own.
Copyright Business Recorder, 2026