Pakistan’s Remittances Hit Record High in May, Bolstering Current Account

Karachi, Pakistan witnessed a significant surge in remittances in May 2024, reaching an all-time high of US$3.2 billion, indicating a robust 15% month-over-month and 54% year-over-year growth. This record-setting performance is a continuation of the upward trend observed during the previous two months, with average remittances of US$2.9 billion. The fiscal year has seen a positive turnaround in remittance growth, contrasting with the 1% year-over-year decline recorded up to February 2024. The Eid and Hajj seasons are expected to maintain high remittance inflows, potentially pushing the annual total close to US$30 billion, a 9% increase from the previous year.

According to JS Global, the significant contributions come from various regions, notably the UAE, which now averages around US$600 million per month in remittances, marking a substantial increase from earlier in the fiscal year. This boost could potentially add approximately US$2.4 billion annually from the UAE alone. Additionally, Saudi Arabia's recent uptick could match this figure if the trend persists. The United States and European Union countries also showed robust growth, contributing around 12% each to the total remittances, up from 11% last year. The continued support from these regions suggests a likely extension of the current account surplus, buoyed further by anticipated support from a forthcoming IMF program and stringent controls on imports maintaining a tight gap between interbank and open market currency rates.