Remittances decline to $1.7bn in April

Updated May 12, 2020

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Covid-19's impact have the potential to drag down remittances as millions of migrant workers have lost their jobs. — AFP/File
Covid-19's impact have the potential to drag down remittances as millions of migrant workers have lost their jobs. — AFP/File

KARACHI: Remittances during the first 10 months of the current fiscal year rose 5.5 per cent, data released by the State Bank of Pakistan (SBP) showed on Monday.

On a month-on-month basis, remittances in April fell to $1.79bn from $1.894bn in March mainly due to sharp global economic contraction due to the pandemic.

The country received $18.78bn during July-April against $17.8bn in the same period last fiscal year. The growth in remittances during the 10 months under review declined to 5.5pc from 8pc last year.

The Covid-19 related impacts have the potential to drag down remittances as millions of migrant workers have lost their jobs across the world particularly in the Middle East where more than 2m Pakistani workers are employed. The World Bank also warned that the remittances to South Asian nations including Pakistan could fall by 22pc during the current year due to Covid-19 related impacts.

April data, however, shows that remittances from almost all destinations remained high. Currency traders were anticipating a much larger impact in April but the seasonal increase due to arrival of Eid — which traditionally sees an increase in remittances — seems to have helped sustain the growth rate.

During the 10 months, highest remittances were received from Saudi Arabia at $4.377bn, showing a growth of 4.8pc compared to 2pc in the same period last fiscal year.

Hundreds of thousands of jobs in the Middle East are at stake particularly due to extremely low oil prices which slashed the leading source of revenues for oil-based economies like Saudi Arabia, Qatar and United Arab Emirates.

Remittances from the United States jumped 21pc to $3.82bn during the 10 months of this fiscal year. In addition, remittances from the United Kingdom — worst affected by the pandemic — increased slightly despite remaining lower than last year’s growth rate of 16.6pc.

Remittances from the UAE also increased by 3.2pc to $3.9bn compared to 4pc growth noted in the previous year.

Pakistan received $1.779bn from Gulf Cooperation Council countries, $515m from the European Union and $1.242bn from Malaysia.

So far, Pakistan has succeeded in narrowing its current account deficit, reducing its imports and increasing foreign exchange reserves.

But analysts believe that remittances could fall this year due to massive fall in the oil prices and huge joblessness of over 30.4m in the United States.

Published in Dawn, May 12th, 2020