Pakistan’s economy remains in a challenging and sensitive stage on various fronts. Another piece of bad news has emerged as the monthly remittance inflows dropped below the $2 billion mark after a 31-month-long period.
According to statistics updated by the State Bank of Pakistan (SBP), the remittance received by the country from overseas Pakistanis fell to $1.9 billion in January 2023. At $1.9 billion, this is the lowest level of remittances recorded in Pakistan since April 2020.
Workers’ remittances recorded an inflow of US$1.9 billion during Jan 23. For detail see https://t.co/7XBd4uOcHC pic.twitter.com/f14W0Z6s5j
— SBP (@StateBank_Pak) February 13, 2023
Last year, the inflows of the remittances stood higher at $2.2 billion and $2.1 billion in the preceding month of December 2022, according to the SBP.
The Head of Equity Research at Ismail Iqbal Securities Fahad Rauf said, “Black market impacted the remittances flow in Jan-23 but still not a bad number, given huge gap btw official and black market rate. Should improve from Feb[ruary]”.
Remittances down 10% MoM
Black market impacted the remittances flow in Jan-23 but still not a bad number, given huge gap btw official and black market rate.
Should improve from feb pic.twitter.com/1iEyPBDufJ
— Fahad Rauf (@analystfahad) February 13, 2023
As per official data, remittance from the USA decreased to $213 million in January 2023 as compared to $230 million reported in December 2022.
The SBP did not comment on the drop in the remittance inflows.
Remittance inflows during January 2023 were primarily sourced from Saudi Arabia ($407.6 million), the United Arab Emirates ($269.2 million), the United Kingdom ($330.4 million), and the United States of America ($213.9 million).
Economic Slowdown, Black Market Hampering Growth
The global economic slowdown can be attributed to the negative growth of remittances, mainly from one country, and the flat growth from several countries hosting Pakistanis. Additionally, the higher open market rate of dollars also enticed expatriates to use alternative channels other than legal and banking ones.
It is noteworthy that over 0.8 million Pakistanis moved to different countries in search of work, which should have been reflected in the remittance inflows, but the values of this source have continuously declined in recent months.
The drop in remittances is bad news on the macroeconomic front, following the persistent stand-off between the government and the global lender, and the free fall of the rupee against the dollar.
The overall remittances during the period of July To January (Seven months) also reduced to $16 billion as against $18 billion recorded in a similar period of the last year.
