Remittances rise 14pc to $10.9bn in July-Sept

Pakistan received a 14 percent increase in workers’ remittances during the first quarter of FY27, amounting to $10.9 billion, according to data from the State Bank of Pakistan (SBP). This surge in remittance inflows could aid the government in reaching its annual target of $44 billion for the fiscal year. However, the September figures showed a slight decline of 1.9 percent compared to August.

The SBP reported that remittances increased by 12.7 percent on a year-on-year basis, while a month-on-month comparison revealed a reduction of 1.9 percent.

Saudi Arabia continued to be the largest source of remittances, contributing $2.686 billion, a 16.2 percent increase in the quarter. The United Kingdom followed with a 19.4 percent rise, totaling $1.643 billion. The UAE accounted for $2.23 billion, marking a 12.6 percent increase, while the United States contributed $305.9 million, reflecting a 9.8 percent growth.

Inflows from European Union countries reached $1.4 billion, up by 9.8 percent. The remaining GCC countries, excluding Saudi Arabia and the UAE, contributed $1 billion, reflecting an 11.7 percent rise.

The growth in remittances did not seem significantly impacted by the ongoing seven-month Gulf War, despite initial concerns. Remittances continue to outpace export earnings, although the government notes exporters' complaints about heavy taxation affecting the sector. Despite the positive trend in remittances, Pakistan faces economic challenges and strives to meet the conditions set by the International Monetary Fund (IMF) program.

The World Bank recently revealed that 48 percent of Pakistan's population lives below the poverty line, despite adherence to IMF guidelines. However, the impact of remittance growth on the broader economy is constrained by the country's expanding trade deficit, which partially negates the benefits of these inflows, including contributions to the external account.