Remittances into Pakistan to grow 5.1pc in 2016: World Bank

LAHORE: Remittances into Pakistan will grow 5.1 percent this year, while India and Bangladesh will see five and 3.5 percent declines, respectively, said the World Bank.

The Washington-based lender, in a report, said falling oil prices have not impacted Pakistan and its people are still working in the oil-producing Gulf countries. 

India, however, is facing multiple problems as its workers are returning from the Gulf countries. The situation is particularly tense in Kerala as bulk of its workforce went to Middle East to seek better earning. Now, that the overseas workers are returning home the workers from other Indian states are feeling threatened. Fortunately, Pakistan is not facing this situation. The remittances flow has slowed down but the growth is still there.

Pakistan has come a long way in workers remittance during the last 15 years. In 2000, remittances into Pakistan were $1.08 billion. At that time, the workers’ remittances into Bangladesh amounted to $1.96 billion. Indian workers remitted $12.84 billion. By the end of 2010, the remittances into India increased to $53.48 billion. Remittances for Bangladesh rose to $10.850 billion, while remittances into Pakistan jumped to $9.69 billion. Pakistan overtook Bangladesh in remittances in 2014 after having reached $17.244 billion as against $14.98 billion in Bangladesh. Workers’ remittances into India peaked to $70.38 billion in 2014 but declined to $68.91 billion in 2015 as the oil crisis started impacting the jobs of its overseas workers. Pakistan’s remittance peaked to $19.36 billion in 2015, posting a double digit growth.

The report said remittances into South Asian region are expected to decline 2.3 percent in 2016, following a 1.6 percent decrease in 2015. Remittances from the Gulf Cooperation Council (GCC) countries continued to decline due to lower oil prices and labour market ‘nationalisation’ policies in Saudi Arabia. 

Weak economic growth in remittance-source countries and cyclical low oil prices dampened the growth of flows from Russia and GCC countries.

More worrisome are the structural factors, such as de-risking by banks, nationalisation policies that discourage demand for migrant workers and exchange controls in several countries faced with adverse balance of payments and falling international reserves.

Against a backdrop of tepid global growth, remittance flows to low- and middle-income countries (LMICs) seem to have entered a new normal of slow growth. In 2016, remittance flows to LMICs are projected to reach $442 billion, up 0.8 percent over 2015. The modest recovery in 2016 is largely driven by the increase in remittance flows to Latin America and the Caribbean on the back of a stronger economy in the United States. In contrast, remittance flows to all other developing regions either declined or recorded a growth deceleration.

The top recipients of remittances, in nominal US dollar terms, include India, China, the Philippines, Mexico and Pakistan and, in terms of remittances as a share of GDP, Nepal, Liberia, Tajikistan, Kyrgyz Republic and Haiti. The reports also said remittance flows are larger than official development assistance and more stable than the private capital flows.

Remittances offset the dismal export performance. Pakistan’s exports were worth $25 billion in 2013 and decreased to $22 billion in 2015. The remittances amounted to $14.62 billion in 2013 and increased $4.7 billion in 2015.