Overview:
Pakistan witnessed a significant surge in remittance inflows during May 2025, with the total reaching $3.7 billion, according to data released by the State Bank of Pakistan (SBP). This marks a 16% month-on-month (MoM) increase from April 2025 and a 13.7% year-on-year (YoY) rise compared to May 2024.
Cumulative Growth:
Over the first 11 months of FY25 (July to May), cumulative remittances stood at $34.9 billion, reflecting a 28.8% increase from the $27.1 billion received during the same period in FY24. This sharp rise underscores the growing reliance on overseas inflows to stabilize Pakistan’s external account and support household consumption in a challenging economic environment.
Economic Implications:
Remittances continue to play a pivotal role in Pakistan’s macroeconomic stability, serving as a vital non-debt-creating source of foreign exchange. These inflows support the current account balance, boost foreign reserves, and provide critical disposable income to millions of households across the country.
In April 2025, SBP Governor Jameel Ahmad emphasized that the strength in remittances would contribute to a substantial current account surplus, calling it the best performance of Pakistan’s external sector in the past two decades.
Country-wise Breakdown: Key Sources of Growth
1. Saudi Arabia:
- May 2025 Inflows: $913.9 million
- MoM Growth: +26%
- YoY Growth: +11.6%
- Insight: Saudi Arabia remained the top source of remittances, reflecting strong labor market participation of Pakistani expatriates and possible Eid-related seasonal transfers.
2. United Arab Emirates (UAE):
- May 2025 Inflows: $754.2 million
- MoM Growth: +16%
- YoY Growth: +12.9%
- Insight: Sustained inflows from the UAE indicate continued demand for Pakistani labor and stable remittance channels.
3. United Kingdom:
- May 2025 Inflows: $588.1 million
- MoM Growth: +10%
- YoY Growth: +24%
- Insight: The sharp YoY increase may reflect better exchange rate utilization, improved remittance infrastructure, or stronger ties with the UK diaspora.
4. United States:
- May 2025 Inflows: $314.7 million
- MoM Growth: +4%
- Insight: While the growth is modest, the consistency from the US market highlights the steady role of North America in remittance support.
Conclusion:
The remittance trend in FY25 signals resilient external sector performance, supported by strong diaspora contributions, particularly from the Gulf and Western countries. If this momentum continues, remittances are likely to surpass expectations and serve as a critical buffer against Pakistan’s balance of payments pressures. Policymakers may leverage this trend to strengthen the rupee, reduce external borrowing, and enhance financial inclusion of remittance-receiving households.