Pakistan’s remittances to grow 7pc in 2024: World Bank

KARACHI: Pakistan emerged among the top five recipient countries for remittances in 2023, according to a World Bank report titled ‘Migration and Development Brief 40’ published on Wednesday.

“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),” adds the report.

At $27 billion, remittances made up 7.9 percent of the GDP in 2023. “With a share of 8.0 per cent of the GDP, Sri Lanka and Pakistan tied for the second position in South Asia, with Bangladesh following at third place with a share of remittances at 5.0 percent of the GDP. Nepal remained at top at 26.5 per cent.”

According to the report, while remittances around the world slowed in 2023, they are expected to grow in 2024. In the context of Pakistan, it says: “Remittance flows to Pakistan are forecast to recover and grow at about 7.0 per cent to reach $28 billion in 2024 and increase at 4.0 per cent to about $30 billion in 2025.”

The report banks its forecast on the assumptions that the country will have a favourable external environment. It also assumes that the government will successfully implement the IMF’s stand-by arrangement; exercise fiscal restraint; and obtain external financing.

The World Bank says that while South Asia’s remittance growth outlook (4.2 per cent) for 2024-25 is still well above the forecast for all other regions, significant downside risks point to a slowdown as strong labour market conditions in key migrant destinations stabilize after a peak in 2023.”

“Besides external factors, the domestic economy conditions prevailing in South Asia’s three largest recipients -- India, Pakistan, and Bangladesh, that collectively receive 91 per cent of the total remittance 39 flows to South Asia -- will play a fundamental role in driving remittance growth.

The single most important risk on the downside is from a weak economic recovery from the recent crises in Pakistan and Bangladesh that would motivate migrants to opt for informal over formal money transfer channels, resulting in lower remittance growth.”

While Pakistan remained among the top recipient countries, the amount of remittances dipped in 2023. Per the report: “weak internal conditions due to a balance of payments crisis and economic difficulties triggered remittances to plummet 12 per cent to $27 billion in 2023 compared with more than US$30 billion in 2022.”

The report says, “The sharp drop in remittance flows to Pakistan reflected the primacy of informal channels of money transfer triggered by exchange-rate-related challenges in the domestic economy.”

It further adds that “considering robust labour market conditions in destination countries, it is likely that a significant share of remittances flowed to Pakistan through informal channels in 2023, leading to the drop in formal remittances.”