Remittances from UK, US jump in October

Inflow from all countries amounts to $1.654b, up 28% month-on-month

KARACHI: Thanks to higher inflows from the UK and US, Pakistan received remittances amounting to $1.654 billion in October 2017, an amount that is 28% higher compared with $1.294 billion the country received in September 2017, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Overall, overseas Pakistani workers remitted $6.444 billion in the first four months (July to October) of fiscal year 2018, up 2.2% compared with $6.301 billion received during the same period of the preceding year.

The inflow of remittances in October 2017 is also 6% higher than $1.561 billion in remittances Pakistan received in October 2016.



The UK and US lead

After a dip last fiscal year, remittances from the UK witnessed an uptick during the recently-concluded month.

In October 2017, Pakistan received $270 million in remittances from the UK, which is 56% higher than $173 million that the country received in the same month of the previous year.

The value of the UK pound Sterling has gained at least two percent against the rupee in the last two months - remittances from the UK jumped significantly in both September and October 2017. This is the highest jump shown by any major foreign currency against the rupee in the open market. Analysts believe, apart from other factors, that the increase in the value of any particular foreign currency encourages overseas Pakistanis to send back more money.

Similarly, the increase was also noted in remittances coming from the US as the country received $216 million from the US in October 2017, up 18% compared with $183 million in the same month last year.

Saudi Arabia and the UAE left behind

Remittances from Saudi Arabia and the UAE - the two most important sources of remittances for Pakistan in the Gulf - are continuously declining.

Remittances from Gulf countries, which has historically accounted for the largest share annually, dropped drastically due to a sharp fall in crude oil prices that hurt the region’s economies.

Pakistan received remittances of $461 million from Saudi Arabia in October 2017, down 2% compared with $470 million in the same month of 2016. Similarly, the country received $334 million from the UAE, down 7% compared with $358 million from the same month of the last year.



However, remittances coming from the GCC (other than the UAE and Saudi Arabia) countries remained flat. Pakistan received $185 million from the GCC countries in October 2017, down 0.5% compared with $183 million in the same month last year.

Overseas Pakistanis living in the European Union (EU) sent back $51 million in October 2017, up 45.7% compared with $35 million in the same month of last year. Meanwhile, remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during October 2017 amounted to $138 million compared with $157 million received in October 2016.

Remittances play a major role in stabilising Pakistan’s external sector, as they make up almost half the import bill and cover the deficit in the trade of goods account. Nevertheless, in recent times, they have come under pressure due to a global economic slowdown on the back of low crude oil prices.

Published in The Express Tribune, November 10^th, 2017.

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