The migrant’s remittances have long served as an important pillar of Pakistan’s external development finance. In a period of stagnant export growth, tight external financing, and balance-of-payments pressure, remittances helped provide macroeconomic relief.
Over the past decade, the amount sent by Pakistani migrants has grown sharply, reaching $38.3 billion in 2025. The flows surpass export receipts of about $32.2bn and foreign investment of $1.84bn. This makes remittances Pakistan’s largest source of foreign exchange earnings. Their macroeconomic significance is equally notable: they account for 10 per cent of the country’s GDP and finance roughly 60pc of imports.
Another reason these flows are so important is their relative stability in comparison to other external flows, such as foreign direct investments and official development assistance. Remittances are often more resilient and appear countercyclical for recipient economies. The flows may therefore smooth households’ consumption and stabilise the economy during difficult times.
Nevertheless, they tend to be pro-cyclical with the host economy, as they depend on migrants’ employment, earnings, and overall economic conditions in the source economies. When these economies perform well, inflows tend to remain robust. When growth slows, they can lose momentum.
A prolonged period of regional disruption could weaken remittance prospects, given that about 92.3pc of Pakistan’s registered overseas workers went to the GCC countries last year
This is what makes the current situation in the Persian Gulf particularly relevant for Pakistan. The risks are not confined to oil prices or disruption in the Strait of Hormuz. The region is also the principal destination for Pakistani workers and the largest source of remittance flows. Any prolonged instability there would therefore shift economic risk through two channels: a higher import bill and weaker remittance prospects.
The scale of this dependence is striking. By 2024, an estimated 6.9 million Pakistanis diaspora were residing abroad. Of these, roughly 3.85m (nearly 56pc) live in the six Gulf Cooperation Council countries. Saudi Arabia, the most popular destination in the region, hosted about 1.94m Pakistanis, followed by the UAE, which hosted another 0.93m. While other destinations such as the UK, the US, Canada, and Italy remain important, the centre of gravity of Pakistani migration remains in the Persian Gulf.
Likewise, the annual flow of workers is even more dominated in Saudi Arabia and other neighbouring Gulf labour markets. In 2025, around 92.3pc of Pakistan’s registered overseas workers went to Gulf Cooperation Council (GCC) countries. Pakistan’s migration system is therefore largely linked to the Gulf.
The quality of those migrants matters as much as their scale. In 2025, labourers accounted for 61pc of registered outflows, and drivers for another 21.5pc. Other categories were relatively small, comprising supervisors, technicians, managers, cooks, salesmen, electricians, engineers, masons, mechanics and carpenters. Recent migration has therefore become more concentrated in low- and semi-skilled employment, especially in construction, transport, logistics, and related services.
These are exactly the sectors most exposed amid regional instability if project execution is weakened, and logistics are disrupted, slowing hiring. Pakistan’s remittance base is therefore vulnerable not only because of regional concentration, but also because it is tied to a narrow occupational mix within that region.
Furthermore, the remittance numbers show the same story. Of the $38.3bn Pakistan received in FY25, $20.89bn was sent from the GCC, maintaining its lion’s share of about 55 per cent. Saudi Arabia contributed $9.35bn (20.4pc), and the UAE $7.83bn (20.4pc). The remaining GCC economies also contribute sizeable flows, with Oman sending $1.32bn, Qatar $1.06bn, Kuwait $0.85bn, and Bahrain $0.48bn. More than half of Pakistan’s remittances thus come from a region now marked by geopolitical tension and economic uncertainty.
There is also a structural dimension. Labour-market nationalisation across the GCC is steadily changing the composition of demand for migrant workers. Policies, for instance ‘Saudisation’ and ‘Emiratisation’, are narrowing the space for low-skilled foreign labour and increasing demand for more specialised and certified skills.
For Pakistan, this shifts the focus from the volume of workers sent abroad to the quality of the workforce being sent with relatively better skills. A migration profile dominated by labourers and drivers can still support sizeable inflows today, though its long-term resilience is increasingly uncertain.
Therefore, for economic resilience, Pakistan needs to shift away from a labour export model dominated by unskilled and semi-skilled workers towards a portfolio built around technicians, certified trades, care workers, logistics personnel, and other digitally enabled professional services. That said, an external labour strategy cannot substitute for domestic competitiveness; a durable response requires lower trade costs, more reliable energy, better logistics, stronger technical education, and a more sophisticated export base at home.
The bottom line is that remittances maximise household welfare and provide the economy with breathing space during financial difficulty. However, if Pakistan continues to rely on low-value labour exports with a narrow occupation and destination profile, remittance strength may coexist with external fragility.
The present Gulf crisis is a reminder that remittances remain important to Pakistan. It is also a reminder that the country needs a more productive domestic base and a more diversified, skilled labour composition abroad.
The writer is the chief of research at the Pakistan Institute of Development Economics.
Published in Dawn, The Business and Finance Weekly, March 23rd, 2026