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Monthly Remittances Drop Bellow $2 Billion, Lowest Since April 2020

On multiple fronts, Pakistan’s economy remains challenging and sensitive. Another piece of bad news is that monthly remittance inflows have fallen below the $2 billion mark after a 31-month period.

According to State Bank of Pakistan (SBP) statistics, remittances received by the country from overseas Pakistanis fell to $1.9 billion in January 2023. This is the lowest level of remittances recorded in Pakistan since April 2020, at $1.9 billion.

According to the SBP, remittance inflows were higher last year at $2.2 billion and $2.1 billion in the preceding month of December 2022.

“Black market impacted the remittances flow in Jan-23, but still not a bad number, given huge gap between official and black market rate,” said Fahad Rauf, Head of Equity Research at Ismail Iqbal Securities. Should improve from Feb[ruary]”.

According to official data, remittances from the United States fell to $213 million in January 2023, down from $230 million in December 2022.

The SBP made no comment on the decrease in remittance inflows.

Saudi Arabia ($407.6 million), the United Arab Emirates ($269.2 million), the United Kingdom ($330.4 million), and the United States of America ($213.9 million) were the primary sources of remittance inflows in January 2023.

 

Economic Slowdown, Black Market Hampering Growth

The global economic slowdown can be attributed to a decline in remittances, primarily from one country, and flat growth in several countries that host Pakistanis. Furthermore, the higher open market rate of the dollar enticed expatriates to use channels other than legal and banking.

It is worth noting that over 0.8 million Pakistanis have moved to other countries in search of work, which should have been reflected in remittance inflows, but the value of this source has steadily declined in recent months.

Following the ongoing standoff between the government and the global lender, and the rupee’s free fall against the dollar, the drop in remittances is bad news on the macroeconomic front.

Overall remittances fell to $16 billion from July to January (seven months) this year, compared to $18 billion in the same period last year.

 

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