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Tuesday, October 22, 2013

Remittances to Pakistan by Pakistani Expats

Do you know what's the biggest export of Pakistan? It's still Textile, amounting to 1.1 billion USD in a single month (stats from Aug 2013). But you might be surprised to know that this export is now matched by the remittances sent in by Pakistanis from abroad to their families back home. The figure is more than a billion dollars in a single month!

Remittances from Pakistani Expats in Sep-2013

The data about remittances is publicly available from the State Bank of Pakistan. Below, we analyse some of the data from September 2013:

Source: State Bank of Pakistan (Home Remittances Sep-2013)

The above figures are in millions of dollars, remitted by Pakistanis in a single month, broken down by countries.

As you can see, the largest remittances come from four countries: Kingdom of Saudia Arabia, the UAE, the UK and the USA. Amount of money remitted from KSA to Pakistan in a single month is 373 million US dollars, followed by the UAE at 276 million USD. Being Pakistanis, we also know that besides Gulf countries, a large number of Pakistanis live in the UK and the US.

Year on year increase in remittances

The following graph shows yearly increase in the last 10 years. Mind that the figures are in USD, and hence, these remittances further strengthen the economy in the backdrop of Rupee losing against Dollar:

Source: World Bank Migration & Remittances Data

Why have the remittances gone up?

working paper by IMF (International Monetary Fund), published in 2011 studies the factors behind this trend of remittances.

The hypothesis presented in the IMF paper are interesting, especially considering the fact that the world economy hasn't been doing really well in general during the last 10 years. The working paper from IMF narrows down everything to the number of migrants moving out of Pakistan and their general skill-level. 

And once again, being Pakistanis, we know that the large outflux of skilled migrants is actually due to the law and order situation in Pakistan. While these migrants are helping a lot to the economy, the "brain drain" impact can't be ignored.

What method do you use for remittance?

Are you a Pakistani living abroad? I am sure you send money back home. What's the method that you use? Do you think you are getting the best rates with minimal transaction fee?