Steady growth in remittances supports Pakistan’s current account
Record-high remittances in May 2024
In May 2024, Pakistan saw a significant boost in remittances, reaching an all-time high of $3.2 billion. This represents a 15% increase from the previous month and a remarkable 54% increase compared to May 2023. The three-month rolling average of remittances has risen to $3 billion, surpassing the eight-month average of $2.3 billion.
Monthly remittance trends
The recent months have shown a steady increase in remittances, particularly from March to May 2024. The following table summarizes the monthly remittance trends:
| Month | Remittances (US$mn) | MoM Growth | YoY Growth |
|---|---|---|---|
| Mar-24 | 2,954 | – | – |
| Apr-24 | 2,813 | -5% | 47% |
| May-24 | 3,243 | 15% | 54% |
Major contributors to remittances
The increase in remittances has been widespread, with the UAE being a significant contributor. Remittances from the UAE reached $668 million in May 2024, a 23% increase from April 2024 and double the amount from May 2023. The following table highlights the remittance contributions from key regions:
| Region (US$mn) | Mar-24 | Apr-24 | May-24 | MoM Growth | YoY Growth | 11MFY24 | YoY Growth |
|---|---|---|---|---|---|---|---|
| USA | 373 | 330 | 360 | 9% | 40% | 3,209 | 11% |
| UK | 462 | 403 | 473 | 17% | 54% | 4,034 | 8% |
| KSA | 703 | 712 | 819 | 15% | 56% | 6,616 | 10% |
| UAE | 548 | 542 | 668 | 23% | 99% | 4,880 | 13% |
| – Dubai | 431 | 437 | 526 | 20% | 112% | 3,714 | 12% |
| – Abu Dhabi | 112 | 100 | 138 | 37% | 64% | 1,116 | 17% |
| Other GCC | 303 | 288 | 314 | 9% | 25% | 2,879 | -2% |
| – Kuwait | 77 | 70 | 80 | 16% | 24% | 727 | -2% |
| – Oman | 100 | 97 | 101 | 3% | 29% | 931 | 1% |
| EU Countries | 315 | 298 | 340 | 14% | 36% | 3,201 | 12% |
| – Germany | 56 | 51 | 57 | 13% | 30% | 534 | 5% |
| – Spain | 52 | 50 | 57 | 14% | 44% | 545 | 23% |
| – Italy | 84 | 79 | 91 | 15% | 34% | 888 | 17% |
| Malaysia | 14 | 17 | 19 | 13% | 155% | 121 | 23% |
| Australia | 65 | 62 | 65 | 5% | 50% | 585 | 7% |
| Others | 172 | 161 | 185 | 15% | 44% | 1,567 | -10% |
| Total | 2,954 | 2,813 | 3,243 | 15% | 54% | 27,093 | 8% |
Positive impact on current account
The rise in remittances, along with import rationalization and a stable exchange rate, bodes well for Pakistan’s current account. For the first time since FY11, there is a strong possibility of achieving an annual current account surplus. This reflects significant economic consolidation efforts.
Future outlook
The trend of higher remittances is expected to continue, supported by seasonal factors such as Eid and Hajj. Projections indicate that remittances may reach close to $30 billion by the end of FY24, marking a 9% year-on-year growth.
Conclusion
The recent surge in remittances is a positive development for Pakistan’s economy. With ongoing efforts to maintain a stable exchange rate and control imports, the country is on track to achieve a current account surplus, signaling economic stability.
Disclaimer:
The information in this article is based on research by JS Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
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