April 13, 2020 (MLN): Despite global recessionary pressure and adverse impact on global economic activity resulted from outbreak of Covid-19, worker’s remittances in Pakistan reported a healthy growth of 9% YoY and 4% MoM to USD 1.89 billion in March 2020.
The qualms of low inflows from overseas Pakistanis due to prevailing dynamics of COVID-19 pandemic and a resulting low oil prices that hit GCC economy from where the major share of Remittances derived, didn’t transform into reality as remittances, contrary to the expectations of considerable drop, witnessed 6% growth during the third quarter of this fiscal year.
According to SBP data, cumulatively, Pakistan received $16.991 billion in remittances during 9MFY20, as against $16 billion in the corresponding period of FY19.
Even though many countries observed a nationwide lockdown, which bolstered a risk of unemployment, Saudi Arabia, UAE, UK and USA remained the major contributor of remittances in Pakistan during the month of March 2020.
SBP data shows that Saudi Arabia remained the single-most important destination with remittances clocking in at USD 3.926 billion in 9MFY20, marking a growth of 5% YoY, from USD 3.746 billion in the corresponding period of last year. While in the month of March alone, expatriate workers in Saudi Arabia sent home USD 452 million, up by 11% YoY and 7% MoM.
Inflows from the United Arab Emirates (UAE) also rose by 11% YoY and 9% MoM to USD 420 million in March, while during 9MFY20, it stood higher by 4% at USD 3.552 billion compared to USD 3.39 billion in Jul-March FY19.
The United States came in as the third largest source followed by UK, posting inflows of USD 2.911 billion and USD 2.55 billion during July-March FY20 respectively, jumping 17% and 5% compared to USD 2.49 billion and USD 2.43 billion in Jul-March FY19.
On contribution basis, Saudi Arabia contributed 23%, followed by UAE (21%), USA (16%), UK (15%), GCC (10%) and EU (3%) during 9MFY20.
Taking cues from the recent media reports that are suggesting that thousands of Pakistanis have lost their jobs in GCC countries and many are facing salary cut, thus, it is prudent to say that this growth will not sustain, and the decline in inflows of remittances in coming month seems almost certain.
However, a phenomenal increase in remittances during the month of Ramadan cannot be ruled out as the holy month is likely to keep remittances stable on a monthly basis in April.
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