Overseas Pakistanis send record $3.2b

KARACHI:

 In July 2025, Pakistan received $3.21 billion in worker remittances, up 7.4% year-over-year from $2.99 billion in July 2024. These remittances were brought to the country by over 2 million economic migrants who were dissatisfied with the political and economic situation in Pakistan and sought employment elsewhere. According to preliminary data released by the State Bank of Pakistan (SBP), the inflows also showed a significant increase of 47.6% compared to July 2023, indicating a strong recovery in transfers of overseas workers over the past two years. Increasing inflows from Saudi Arabia, the United Kingdom, the United Arab Emirates (UAE), and the European Union (EU) were primarily responsible for the expansion. However, despite the overall improvement, the data indicate emerging vulnerabilities for Pakistan's external account due to significant declines in a number of important remittance corridors.

Pakistan remained dependent on the Gulf Cooperation Council (GCC) for the majority of its remittances. With $823.7 million in July, Saudi Arabia topped the list, up 8.4% year over year from $760.1 million. The United Arab Emirates came in second with $665.2 million, up 8.8% year over year, and Abu Dhabi inflows surged 37%. However, Dubai saw a decrease of 3.1%, falling from $471.6 million a year earlier to $456.8 million. $296 million, or a modest 2.6% increase, was contributed by other GCC nations. Oman's share of this group increased by 7.1%, while Kuwait's share decreased by 11.1% to $62.5 million. These figures emphasize both intra-regional volatility and the GCC's continued dominance of Pakistan's remittance profile. In July, the United Kingdom sent $450.4 million, an increase of 1.6 percent year-over-year. With notable gains from Italy (+23.6% to $130 million), Spain (+35.7% to $72.7 million), and Ireland (+48% to $19.4 million), the European Union contributed $424.4 million, an increase of 21%.

The growth was not shared by all regions. Double-digit declines were observed in a number of significant remittance sources. From $300.1 million, the United States lost 10.2% year-over-year to $269.6 million. Malaysia lost $13.4 million, or 17 percent. Japan lost 7.5 percent to $4.5 million, and South Korea lost 9.7 percent to $9 million. Additionally, Kuwait saw a decrease of 11.1% to $62.5 million. Given Pakistan's reliance on a small number of significant remittance corridors, such drops are concerning. Despite the positive overall numbers for July, the data reveal a number of structural obstacles to Pakistan's remittance inflows. With Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States alone accounting for more than two-thirds of total inflows, the nation remains heavily dependent on a few markets. Pakistan's remittances could be severely impacted by any economic downturn, policy shift, or employment shock in these nations. The GCC's intra-regional divergence, such as the decline of Dubai and the rise of Abu Dhabi, demonstrates how labor demand and earnings can vary significantly even within the same region. Given that it is the fourth-largest source, the 10% drop from the US may be related to rising living costs for migrants, shifts in job markets, or increased use of informal channels. Pakistani labor's stagnation or decline in competitiveness in East Asian markets, particularly Japan, South Korea, and Malaysia, may be attributable to competition from other migrant-sending nations. Furthermore, any sustained drop in crude prices or tightening of Gulf labor laws could dampen remittances because GCC remittance strength is frequently correlated with oil revenues and employment.

Pakistan must work to diversify its remittance base, according to economists, even though the 7.4% annual growth in July is a positive sign. It's risky to rely so heavily on a small number of nations. In order to safeguard and enhance this essential source of foreign exchange, the government needs to make investments in worker upskilling. In addition, the monthly breakdown of the SBP reveals that July's inflows were higher than the monthly average of $3.19 billion for FY26, indicating a strong beginning to the fiscal year. Arif Habib Limited reports that Pakistan's workers' remittances in July reached $3.21 billion, its highest level ever. The historic figure also reflects a strong recovery from the dip in FY23, supported by stable exchange rates, seasonal Eid-related inflows, and improved banking facilitation, as overseas Pakistanis sent more funds through formal channels.