Remittances rise to $19.7b in H1

December inflows jump 17% YoY to $3.6b, supporting external account

KARACHI:

Pakistan's remittance inflows maintained strong upward momentum during the first half of FY26, providing continued support to the country's external account amid a declining export environment.

According to data issued by the State Bank of Pakistan (SBP), remittances sent by overseas Pakistanis rose 11% year-on-year (YoY) to $19.7 billion during the first half of fiscal year 2026 (1HFY26).

"In 1HFY26, remittances increased by 11% YoY to $19.7 billion," AHL data highlighted.

The growth was driven by a sharp increase in December inflows, which climbed 17% YoY to $3.6 billion, compared with $3.1 billion in December 2024. On a month-on-month (MoM) basis, remittances were up 13%.

Topline Securities corroborated the trend, noting that Pakistan received $3.6 billion in remittances in December 2025, marking a 17% YoY and 13% MoM increase. The brokerage highlighted that cumulative inflows during 1HFY26 stood at $19.7 billion, reflecting an 11% YoY rise.

Market analysts attributed the sustained growth in remittances to multiple structural and cyclical factors. These include higher manpower exports in preceding years, a narrowing differential between formal and informal exchange rates, and the continued implementation of the government's remittance incentive schemes, which encourage overseas Pakistanis to use official banking channels.

"Remittances growth momentum is continuing on the back of higher manpower exports in previous years, lower differential in formal and informal exchange market and continuation of remittances incentive package," Topline Securities noted in its commentary.

In 2025, a total of 762,499 Pakistanis proceeded abroad for employment, according to final statistics released by the Bureau of Emigration and Overseas Employment. This marks a notable increase from the 727,381 registered in 2024, driven primarily by demand in Gulf countries, with Saudi Arabia remaining the top destination. The outflow, comprising mostly skilled and unskilled labourers, underscores Pakistan's ongoing reliance on overseas remittances amid domestic economic challenges, while also highlighting concerns over brain drain in professional sectors.

On the outlook, analysts remain cautiously optimistic. Brokerage houses maintained their full-year FY26 remittance target at $41 billion, representing a 7.5% increase from the FY25 level of $38 billion. If achieved, this would mark one of the highest annual remittance inflows in Pakistan's history and provide a crucial buffer for the balance of payments.

However, some economists warned against overreliance on remittances as a substitute for deeper structural reforms. Najam Ali, Chief Executive Officer of Next Capital, cautioned that while rising remittances can ease short-term external pressures, they may also reduce the urgency for policy action.

"Growing remittances may plug the current account gap, but they also enable economic complacency by postponing overdue and painful trade policy reforms," he said.

Pakistan has historically relied on remittances, since Zulfikar Ali Bhutto in the first half of the 1970s, to offset chronic trade deficits, particularly during periods of weak exports and limited foreign direct investment. While the latest figures underscore the resilience of overseas inflows, analysts stressed that sustainable external stability will ultimately depend on export diversification, productivity gains, and long-delayed trade and industrial reforms.

Economist Nadeem Haque commented, "There is noise of narrative every 30 seconds; negotiations every hour, but reforms are missing since 1947."

Furthermore, the SBP, on Friday, injected Rs1.6 trillion through Reverse Repo Purchase and Shariah-compliant Mudarabah-based Open Market Operations (OMO) to maintain liquidity in the market.

The central bank conducted the Open Market Operation, Reverse Repo Purchase (Injection), for seven- and 14-day tenors on January 09, 2026, and injected Rs1,296.1 billion against nine bids, while the remaining Rs294 billion were injected through Shariah-compliant Mudarabah-based OMO.

Moreover, the rupee on Friday appreciated by three paisa against the US dollar in interbank trading and closed at Rs280.02 compared to the previous day's closing at Rs280.05.

Gold prices in Pakistan rose on Friday, tracking gains in the international bullion market as investors assessed weaker-than-expected US payrolls data alongside persistent policy and geopolitical uncertainty

In the local market, the price of gold increased by Rs3,400 to Rs469,562 per tola. Similarly, the price of 10-gram gold climbed by Rs2,915 to Rs402,573, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association. A day earlier, gold had declined by Rs600 to close at Rs466,162 per tola.

Silver prices also edged higher, gaining Rs70 to settle at Rs8,195 per tola.

Internationally, spot gold rose 0.2% to $4,485.73 per ounce by 9:33am ET and was on track for a weekly gain of around 3.8%, after touching a record high of $4,549.71 in late December.

Adnan Agar, Director at Interactive Commodities, said gold has moved slightly higher as recent data favoured the metal. He noted that a decisive break above $4,500 could trigger further upside, while failure to do so may pull prices back toward the $4,400–$4,350 range.