KARACHI: Overseas Pakistanis sent home $2.2 billion in October, down 9.1 per cent from the preceding month.
Data released by the State Bank of Pakistan on Friday showed the year-on-year decline in remittances last month clocked in at 15.7pc.
Speaking to Dawn, Pak-Kuwait Investment Company Ltd Head of Research Samiullah Tariq said monthly inflows have been in decline because of three major reasons.
One, interest rates have gone up considerably in major economies of the world. This has diverted the flow of dollars towards saving and investing instruments that pay smart returns.
Inflows dip to $2.2bn in October, down 9pc over September and 16pc on annual basis
Two, an overall economic downturn around the world has taken a toll on people’s disposable incomes. They’re left with smaller sums of money after meeting their immediate expenses. This has shrunk the average size of remittance that an overseas Pakistani sends home every month.
The third and perhaps the most important reason for lower remittances is the widening gap between the official and unofficial exchange rates. “Many people are now opting for unofficial channels, which offer a considerably better exchange rate,” said Mr Tariq.
The cumulative inflow of $9.9bn in the first four months of 2022-23 reflects a drop of 8.6pc on a year-on-year basis.
Inflows from all major sources registered a year-on-year drop in July-October. For example, remittances from the United States in the four-month period decreased 8.6pc, Saudi Arabia 11.7pc and United Arab Emirates 9.2pc.
Remittances from other Gulf countries dropped 6.2pc year-on-year during the four months while the decline remained 11.1pc for member countries of the European Union. Inflows from Canada and Malaysia recorded a decrease of 10.8pc and 1.2pc, respectively. The only major country posting growth in remittances was the United Kingdom. Inflows from the kingdom remained 6.9pc higher than a year ago.
Inflows in October alone were mainly sourced from Saudi Arabia as expatriates from the Arab nation sent home $570.5 million. Remittances from the United Arab Emirates were $427m while the inflows from the United Kingdom totalled $278.8m in October. Overseas Pakistanis based in the United States remitted $253.1m last month, data showed.
Meanwhile, separately released statistics showed banking deposits increased 16pc year-on-year to Rs22.4 trillion at the end of October. Advances rose 18pc to Rs11.1tr over the same 12 months while investments increased by one-third on an annual basis to Rs18.3tr.
According to Arif Habib Ltd, the advances-to-deposits ratio stood at 49pc in October, up 75 basis points from a year ago. The investments-to-deposits ratio clocked in at 82pc, up 1,027 basis points on a year-on-year basis.
Published in Dawn, November 12th, 2022
