The coronavirus outbreak poses a threat to the world’s economy and Pakistan isn’t safe either. Emerging markets that rely on remittances could face a bigger blow, which includes Pakistan.
According to a report by Bloomberg, millions of job losses among overseas workers and international border closures are contracting the $690 billion annual flow of global remittances at a time when many emerging economies need hard currency more than ever.
The report highlighted that this situation will also affect the remittance income for Pakistan as almost a third of Pakistan’s money transfers come from the U.S. and the U.K., two countries at the epicenter of the coronavirus outbreak, according to Mohamed Abu Basha, head of macroeconomic research at Cairo-based investment bank EFG Hermes.
“I would expect to see a bit of a slowdown for one to two quarters because of that exposure,” Abu Basha told Bloomberg, adding that some of the drop will be offset by lower fuel costs.
The report noted that global remittance flows have reached record highs in recent years as countries have become more interconnected. Apart from China and Ecuador, most of the reported COVID-19 cases come from industrialized nations that are home to the majority of the world’s migrant workers.
Elina Ribakova, deputy chief economist at the Institute of International Finance in Washington told Bloomberg:
The countries where migrant workers are temporarily based are experiencing a big crisis, and many of them are in the sectors that are being hit.
It is to be noted that remittances to Pakistan crossed the $15 billion mark during the first eight months of this fiscal year (Jul-Feb FY20).
Overseas Pakistani workers remitted $15.126 billion in July to February of FY20, up by 5.4% as compared to $14.355 billion received during the same period in the preceding year, according to the State Bank of Pakistan.