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.

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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.