Remittances cross $34.9b for FY2025
Listen to article
The State Bank of Pakistan (SBP) reported a robust increase in workers' remittances for May 2025, providing crucial support to the external sector amid a widening trade imbalance caused by rising imports and declining exports.
According to the latest data, total remittance inflows reached $3.7 billion in May, up around 14% year-on-year. This upward trajectory has been a consistent feature throughout the ongoing fiscal year 2024-25, offering some relief to Pakistan's external account pressures.
"Workers' remittances reflect robust growth of 16% month-on-month and 13.7% year-on-year, signalling sustained confidence of overseas Pakistanis in formal banking channels," said Ali Najib, Deputy Head of Trading at Arif Habib Limited (AHL).
Cumulative inflows from July to May FY2025 stood at $34.9 billion, marking a strong 28.8% increase from the same period last year, he said. This rise is likely due to improved documentation, regulatory support, and seasonal Eid-related transfers.
Saudi Arabia, the United Arab Emirates (UAE), the United Kingdom (UK), and the United States (US) remained the top contributors, with the rising trend offering vital support to foreign exchange reserves.
Saudi Arabia led with $913.9 million, followed by the UAE at $754.2 million and the UK at $588.1 million. The UAE showed the strongest growth, with a 45.7% increase during July-May, and Dubai alone sending $567.2 million in May. European Union (EU) countries posted a 28.1% rise, with Italy contributing $118.2 million.
Significant year-on-year growth was seen from non-traditional markets such as South Africa (74%), Ireland (53.1%), and Malaysia (40.4%). This reflects the Pakistani population's struggle for gradual diversification as traditional markets become more saturated.
Monthly figures showed a peak in March 2025 at $4.05 billion, with steady inflows continuing through May. The fiscal year's average monthly remittance stood at $2.52 billion, up 10.7% from FY24.
Experts attribute the surge to favourable economic conditions in host countries, a stable exchange rate, and Pakistan's push to formalise channels through digital platforms like Roshan Digital Account and SBP EasyData. These reforms have improved transparency and accessibility, making formal remittance channels more attractive for overseas Pakistanis.
Despite gains, concerns remain about the sustainability and inclusivity of this growth. Heavy reliance on traditional markets - accounting for 61% of inflows — exposes Pakistan to risks from labour policy changes or economic slowdowns in those regions.
Remittances from the US declined 12.4% year-on-year in May 2025, possibly due to regulatory tightening or demographic shifts in the diaspora.
High transfer costs between 5% and 7% — continue to drive users toward informal channels like hawala. Persistent exchange rate gaps between official and parallel markets also reduce incentives to use formal systems.
Data issues complicate accurate analysis. There is limited reporting on remittance purposes, and foreign currency account flows are included in headline figures.
Structural challenges persist as well. Most Pakistani workers abroad are in low-skilled jobs, especially in Gulf countries, making inflows vulnerable to wage stagnation and automation in labour-importing countries such as Saudi Arabia under its Vision 2030 reforms. Moreover, Pakistan's policies have yet to fully engage the diaspora in high-value activities beyond basic remittances, such as investments in bonds or startups.
Seasonal fluctuations also affect stability. The 16% month-on-month jump in May 2025, partly due to Eid, highlights the volatility of these flows. This contrasts from April-May patterns in previous years, underlining their unpredictability.
To improve resilience, experts recommend diversifying labour destinations, cutting transfer costs through fintech collaboration, publishing detailed remittance data, and upskilling workers to meet demand in advanced economies.
Such measures are critical to ensuring that remittances continue to serve as a resilient and growth-supporting element of Pakistan's economy, which remains reliant on these inflows for covering 8-10% of its GDP.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
Reserves hit 3-year high at $16.9b
A A key concern influencing the MPC's cautious stance is the recent rebound in international crude oil prices due to heightened geopolitical tensions in the Middle East and the possibility of a US-China trade agreement. photo: file Listen to article Pakistan's total liquid foreign exchange reserves have surged to $16.88 billion — the highest level in 163 weeks, last recorded on April 16, 2022. Speaking to The Express Tribune, Deputy Head of Trading at Arif Habib Limited (AHL), Ali Najib said, "Of this, the State Bank of Pakistan (SBP) holds $11.68 billion, marking a 20-week high last seen on January 20, 2025, while commercial banks maintain reserves of $5.20 billion." The SBP's foreign exchange reserves rose by $167 million during the week ended June 6, 2025, according to data released by the central bank on Thursday. This represents a weekly increase of $277 million and a fiscal year-to-date (FYTD) rise of $2.88 billion, he said in his commentary. As a result, the country's import cover has improved to 1.94 months, up from 1.91 months previously. The surge in reserves is attributed to stronger export performance, robust remittance inflows, and financial support from the International Monetary Fund (IMF) as well as bilateral partners. "This boosts investor confidence, strengthens the rupee, and enhances the country's ability to pay for imports and service debt," said Najib. This improvement also lowers default risk and supports inflation stability, contributing positively to the overall macroeconomic environment. The central bank announced that the Monetary Policy Committee (MPC) of SBP will meet on Monday, June 16, 2025, to decide about the monetary policy. In a poll conducted by Topline Securities, 56% of market participants expect the central bank to maintain the current policy rate in the upcoming meeting, a notable increase from 31% in the previous poll. Meanwhile, 44% anticipate a policy rate cut of at least 50 basis points (bps). Within this group, 19% foresee a 50bps reduction, while 25% expect a more aggressive cut of 100bps. Despite the market's mixed expectations, Topline Research believes that the central bank has room for a further cut of around 100bps, considering that average inflation for FY26 is projected to remain between 6-7%. This would translate into a real interest rate of 400-500bps — well above the historical range of 200-300bps — assuming a policy rate of 11%. However, the SBP is widely expected to maintain a status quo in its upcoming monetary policy meeting amid persisting uncertainties on both domestic and global fronts. A key concern influencing this cautious stance is the recent rebound in international crude oil prices, which have surged to the $68-70 per barrel range due to heightened geopolitical tensions in the Middle East and the possibility of a US-China trade agreement. Given that global oil prices have historically played a significant role in driving domestic inflation, this development is likely to compel the central bank to adopt a wait-and-see approach. Moreover, the potential inflationary impact of upcoming domestic adjustments — such as anticipated notifications regarding gas and electricity tariff hikes — remains unassessed and yet to be absorbed by the market. These factors, combined, support the likelihood of the SBP keeping its policy rate unchanged in the near term. Minutes from the last MPC meeting held on May 5, 2025, revealed that eight out of nine members favoured a 100-basis points rate cut. However, since that easing, yields on the six-month Karachi Interbank Offered Rate (KIBOR) and six-month T-bills have increased by 88-99 basis points. Currently, the six-month KIBOR and T-bills stand at 11.09% and 10.95%, respectively. As per the Topline survey, inflation is expected by most respondents to average 6-8%, with the rupee projected to settle between Rs280-290 per US dollar by year-end. Meanwhile, the rupee depreciated for a second straight session, closing at 282.67 per dollar, while domestic gold prices jumped by Rs4,000 per tola to Rs356,900, following international gains.
Express Tribune
an hour ago
- Express Tribune
PSX retreats from record on profit-taking
Listen to article The Pakistan Stock Exchange (PSX) experienced a turbulent session on Thursday, where the benchmark KSE-100 index hit a record intra-day high at 126,718 before reversing course to close modestly lower. The day saw intense swings, reflecting both optimism fuelled by post-budget clarity and renewed pressure from geopolitical tensions. Early gains were supported by improved investor sentiment, driven by the budget announcement, robust remittances and monetary policy expectations. However, the rally lost steam as the session progressed, with profit-taking in overheated stocks and geopolitical uncertainty, surrounding the Middle East, undermining sentiment. Global equity selloffs, a slump in crude oil prices and a weakening rupee added to investor concerns. Arif Habib Corp MD Ahsan Mehanti stated that stocks closed under pressure on geopolitical uncertainty and post-budget profit-taking in overbought shares. "The rout in global equities on Middle East tensions, a slump in international crude oil prices and a weak rupee on contracting exports were among the key factors behind bearish close of the market," he added. At the end of trading, the benchmark KSE-100 index lost 259.56 points, or 0.21%, and settled at 124,093.12. KTrade Securities noted that the bourse experienced a volatile session as the KSE-100 index fluctuated between the high of 126,718 and low of 123,846, ultimately closing down 0.21% at 124,093. Initial gains were driven by positive market sentiment following the FY26 budget, perceived as favourable for capital markets. However, rising geopolitical tensions involving Iran, Israel and the US prompted heavy profit-taking later in the day, it said. Negative contribution mainly came from sectors such as investment banks, oil and gas, and fertiliser, where notable contractions were seen in Engro Holdings, Fauji Fertiliser, Pakistan Petroleum and OGDC. Cement stocks saw strong buying before profit-taking set in. Given the ongoing regional uncertainties, the market outlook is likely to remain cautious, added KTrade. Arif Habib Limited (AHL) Deputy Head of Trading Ali Najib wrote that the PSX witnessed a dramatic session, which led to a lower close for the KSE-100 index after hitting a record intra-day high. The market opened strong, building on the previous session's bullish momentum and breaking key psychological levels of 125,000 and 126,000. However, profit-taking in the latter half erased gains and dragged the index into the negative territory. The pullback comes after several sessions of aggressive rallying, largely driven by improved macroeconomic indicators and declining cut-off yields in the T-bill auction, Najib said. Topline Securities mentioned in its review that the stock market ended on a negative note, weighed down by cautious investor sentiment and profit-taking. It attributed the downtrend largely to declines in shares of Engro Holdings, Fauji Fertiliser, Pakistan Petroleum, OGDC and Bank Alfalah, which erased 401 points from the index. In contrast, support came from Pakgen Power, United Bank, Bank AL Habib, Lucky Cement and DG Khan Cement, which added 347 points. JS Global analyst Mubashir Anis Naviwala said that the index hit a high of 126,718 before profit-taking dragged it down by 260 points. The analyst advised investors to watch for key support levels and use dips to accumulate stocks with focus on fertiliser, cement and banking sectors for near-term opportunities. Overall trading volumes decreased to 1.02 billion shares compared with Wednesday's tally of 1.04 billion. The value of shares traded was Rs50.5 billion. Shares of 474 companies were traded. Of these, 170 stocks closed higher, 270 fell and 34 remained unchanged. Sui Southern Gas Company was the volume leader with trading in 55.9 million shares, rising Rs0.78 to close at Rs41.92. It was followed by Fauji Cement with 50.6 million shares, gaining Rs0.49 to close at Rs47.36 and WorldCall Telecom with 49.3 million shares, falling Rs0.08 to close at Rs1.37. Foreign investors sold shares worth Rs685.8 million, the National Clearing Company reported.
Express Tribune
2 hours ago
- Express Tribune
Passenger car sales jump 32% in 11 months
Listen to article Passenger car sales increased by 32.1% to 94,388 units during the first 11 months of the current fiscal year compared to the same period in the previous year on account of a variety of reasons, including a dramatic fall in interest rates, back-to-back Eid festivities, anticipated price hikes ahead of the federal budget 2025-26, and others. According to data released by the Pakistan Automotive Manufacturers Association (PAMA), sales of all vehicles, including two-, three-, and four-wheelers, increased; however, sales of farm tractors declined. Sales of jeeps-cum-pickups rose by 66% to 31,706 units. Sales of trucks and buses increased by 95.7% to 3,776 units and by 73.3% to 719 units, respectively. Sales of motorcycles and rickshaws also surged by 30% to 1,378,131 units. However, sales of farm tractors fell by a dramatic 36.8% to 26,401 units. Automobile consultant and expert Shafiq Ahmed Shaikh said it augurs well that, excluding the tractor segment, other parts of the auto sector are gaining momentum as they are on an upward trend. This reflects that the auto industry is growing and regaining strength. "In my opinion, there are four main reasons. First, the reduction in interest rates — different banks and financial institutions are offering good and affordable instalment schemes. Secondly, owing to information and rumours ahead of the federal budget that vehicle prices will rise, sales have increased. Thirdly, during both Eidul Fitr and Eidul Azha, sales witnessed substantial rises as customers wanted vehicles during the Eid holidays to celebrate in a better way. Finally, credit for the significant rise in vehicle sales also goes to improved law and order, which has supported the industry, along with favourable government measures allowing the industry to flourish. In my opinion, the auto industry has the potential and capacity to grow. We foresee that the existing industry will face stronger competition from electric vehicles (EVs), as the future will mainly depend on EVs," he said. Auto sector analyst Mashood Khan said all segments of the automotive industry performed well except for the tractor segment. The motorcycle industry has continuously gained strong momentum throughout the year due to the middle class, which cannot afford expensive four-wheelers. When it comes to the auto industry overall, it has started regaining strength. Meanwhile, raising concerns about the recently announced federal budget 2025-26, MG Motors Pakistan General Manager (GM) Marketing Division Syed Asif Ahmed said the industry is seeking clarity on the budget. Hybrid Electric Vehicles (HEVs) enjoy 8.5% GST compared to 18% on EVs. This anomaly has existed for many years, giving HEVs an advantage over EVs. "Social media has reported an increase in the GST for HEVs from 8.5% to 18%. If true, this will jeopardise the huge investments made by almost all automakers in HEVs. The Finance Bill is silent on the subject, despite the Automotive Industry Development and Export Plan (AIDEP) 2021-26 commitment of no change in tariffs until June 2026. What is needed is for EV GST to be reduced to 8.5% to match HEVs," he said. He added that used car importers are abusing the gift, baggage, and transfer of residence schemes for commercial trading. Allowing commercial imports of five-year-old used cars with reduced Regulatory Duty (RD) will distort the playing field against local assemblers.
