Remittances to Pakistan touched $2 billion in October this year – the second time the inflow from expatriate Pakistanis living in different countries totalled the $2 billion figure in 2018.
According to analysis from the Economist Intelligence Unit (EIU), October remittances stayed above the average monthly remittances of $1.7 billion. The increase in remittances was driven primarily by the weakening of the Pakistani rupee, which made the currency attractive for the expat population.
EIU predicts higher remittances for Pakistan in 2018 compared to the previous year. Among other factors driving the higher inflows are the rising oil prices and better economic conditions in the Gulf countries – which boast a sizeable proportion of the expat population.
Remittances from Saudi Arabia posted a rise of 7.3% in October, with the figure likely to pick up in 2019 as oil prices are expected to rise slightly more.
The higher remittances, however, will not be enough to plug external sector financing gaps, EIU warned.
The current account deficit is estimated to fall to $13.1 billion in 2019, against projections of $18.3 billion in 2018. The deficit will stand at around 5.8% of the GDP, it stated.
An International Monetary Fund bailout program is likely to begin in early 2019. Loans from bilateral donors might also avert a balance-of-payments crisis, EIU added.