Remittances rise 13pc to $3.6bn in July

Remittances from overseas Pakistanis in July met the government's expectations, with a 13% increase compared to the same month last year, according to data from the State Bank of Pakistan. The inflows totaled $3.6 billion, compared to $3.2 billion in July 2025. Month-over-month growth was 4.5%. The government aims to achieve a target of $44 billion in remittances for fiscal year 2027, up from $41.5 billion in 2026.

Despite ongoing conflict in the Middle East, remittances from the region remained strong, with Saudi Arabia and the UAE continuing to be the major corridors for workers' money transfers. Currency experts attribute this resilience to thousands of Pakistanis migrating to the Middle East for employment, with many settling in Saudi Arabia.

The influx of remittances has bolstered the country's foreign exchange reserves, which are still largely composed of deposits from Saudi Arabia and China. However, the current account deficit remains a concern, with a $39 billion trade deficit eating up most of the remittance inflows. This deficit was exacerbated by a $3.5 billion trade gap in the current fiscal year, which has raised concerns among economic stakeholders about the impact of a cheaper dollar on imports and the overall trade balance.

Despite the significant inflow of remittances, Pakistan has struggled to increase exports to China, its largest trading partner, leading to a persistent trade deficit. Additionally, under-invoicing and smuggling from China are prevalent issues that further complicate the economic situation. The major remittance corridors in July were Saudi Arabia ($913.9 million), the UAE ($737.3 million), the UK ($555.5 million), the US ($317.2 million), and EU countries ($452 million).