Remittance flows to Pakistan are expected to rebound and grow by approximately 7 per cent, reaching $28 billion in 2024, with a further increase of 4 per cent to around $30 billion in 2025, according to the World Bank’s ‘Migration and Development Brief 40’ released on Wednesday.
In 2023, Pakistan experienced a 12 per cent decline in remittance inflows, dropping to $27 billion, due to weak economic conditions, including a balance of payments crisis. Despite these challenges, Pakistan emerged as one of the top five recipient countries for remittances in 2023.
“The top five recipient countries for remittances in 2023 are India with an estimated inflow of $120 billion, followed by Mexico ($66 billion), China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion),” the report stated.
Despite the global demand for labour in countries like the USA and those within the OECD, Pakistan’s internal economic struggles caused remittances to drop.
The World Bank noted that many remittances were likely sent through informal channels in 2023, due to robust labour market conditions in destination countries.
“Recent economic crises in Pakistan highlighted that delays in reforms not only deterred Foreign Direct Investment (FDI) but also negatively impacted formal remittance flows,” the report added.
Home remittances play a crucial role in supporting Pakistan’s external account, stimulating economic activity, and supplementing the incomes of remittance-dependent households.
During the first 11 months of FY24, workers’ remittances recorded an inflow of $27.093 billion, a 7.7 per cent increase compared to $25.146 billion during the same period in FY23.
The report also revealed that with a share of 8 per cent of GDP, Sri Lanka and Pakistan are tied as the second most remittance-dependent countries in South Asia. Overall, remittances to South Asia grew by 5.2 per cent in 2023, reaching $186 billion, though this growth rate slowed from 12 per cent in 2022.
This growth was primarily driven by India, which saw a 7.5 per cent increase to $120 billion, supported by strong labour markets in the United States and Europe.
The slowdown was partly due to reduced outflows from GCC countries, impacted by declining oil prices and production cuts. Remittance flows to South Asia are projected to grow by 4.2 per cent in 2024.
The World Bank highlighted that the economic conditions in South Asia’s largest recipients—India, Pakistan, and Bangladesh, which collectively receive 91 per cent of the region’s remittances—will be crucial in driving remittance growth.
However, a weak economic recovery in Pakistan and Bangladesh poses a significant risk, potentially leading migrants to favour informal money transfer channels, thus reducing formal remittance growth.
