Remittances to Pakistan recorded strong growth amid pandemic
Remittances to Pakistan grew at the fastest rate in almost 20 years during the coronavirus pandemic. This is according to the latest data by the State Bank of Pakistan (SBP).
Remittances to Pakistan
Pakistanis living abroad sent a record amount of money back home in 2020/21. According to the SBP, they sent more than $29.4 billion for the year that ended in June. This was a higher number than $23.3 billion in the same period last year. Inflows rose by 27%, the fastest pace since 2003. In a statement, the bank said:
“This [remittances] helped improve the country’s external sector position despite the challenging global economic conditions in the past year.”
Most importantly, remittances to Pakistan have risen to more than $2 billion per month this year. This trend will likely continue as the country battles the new wave of the virus. Further, the trend will be driven by the fact that many of the source countries have done well in vaccinating their population. These countries include the United States, United Kingdom, and Canada.
At the same time, the labour market in these countries is doing well. Recent numbers showed that the unemployment rate in the three countries fell modestly in June and May. This trend could see more Pakistanis living there increase their payments back home.
Why remittances increased during the pandemic
The SBP data came on the same day that the World Bank revealed six key reasons why remittances rose during the pandemic. Some of the reasons identified were savings repatriation and better capturing of statistics as more people used digital platforms. Other reasons were generosity, financial innovation, tax incentives, and host country transers.
Many fintech companies are expected to benefit substantially as remittances to emerging markets rise. Some of those that are expected to benefit are companies like Wise, PaySend, and Remitly. Traditional companies like Western Union and MoneyGram are expected to do well as well. In a recent update, MoneyGram said that its revenue in the second quarter rose to about $330 million.