June 28, 2024 (MLN): Remittance flows to Pakistan are forecasted to recover and grow at about 7% to reach $28 billion in 2024 and increase at 4% to about $30bn in 2025, said the World Bank in its report ‘Migration and Development Brief 40’ released on Wednesday.
In addition to the favorable external environment, the World Bank's forecast assumes that the government will successfully implement the IMF’s Stand-By Arrangement, exercise fiscal restraint, and obtain external financing.
As per the report, Pakistan emerged as the fifth largest recipient country for remittances in 2023.
The top five were India, with an estimated inflow of $120bn, followed by Mexico ($66bn), China ($50bn), the Philippines ($39bn), and Pakistan ($27bn).
Read: Pakistan records highest-ever monthly remittance inflow
In South Asia, Pakistan held the second spot behind India.
As a percentage of GDP, Pakistan and Sri Lanka tied for the second position in South Asia with a share of 8% of GDP.
Remittances as a share of GDP scored significantly lower in the remaining South Asian countries, including India with a share of 3.3%.
In Pakistan, weak internal conditions due to a balance of payments crisis and economic difficulties triggered remittances to plummet 12% to $27bn in 2023 compared with more than $30bn in 2022, the report noted.
The sharp drop in remittance flows to Pakistan reflected the primacy of informal channels of money transfer triggered by exchange-rate-related challenges in the domestic economy, it highlighted.
The recent economic crises in Pakistan and some other countries demonstrated that reform delays were not only a deterrent to FDI, but also equally penalized formal remittance flows to these countries until their governments undertook corrective actions.
The World Bank noted that considering robust labor market conditions in destination countries, it is likely that a significant share of remittances flowed to Pakistan through informal channels in 2023, leading to a drop in formal remittances.
The report noted that besides external factors, the domestic economy conditions prevailing in South Asia’s three largest recipients—India, Pakistan, and Bangladesh, that collectively receive 91% of the total remittance flows to South Asia—will play a fundamental role in driving remittance growth.
"The single most important risk on the downside is from a weak economic recovery from the recent crises in Pakistan and Bangladesh that would motivate migrants to opt for informal over formal money transfer channels, resulting in lower remittance growth," it added.
Copyright Mettis Link News
Posted on: 2024-06-28T10:29:47+05:00
