Remittances to swell by $16b by end of FY13

Economic observers expect the inflow of ever-increasing worker remittances to the country rise to a historic $ 16 billion by the end of this financial year.
“Home remittances continue to remain upbeat reaching the level of USD 7.1 billion during the first six months of FY13,” said analysts at InvestCap Research.
Terming it as one of the major supporting tools for the current deficit, the remittances from expatriates, they said, continued its upward trajectory.
During the first half of FY13, remittances posted a colossal growth of 12.5% YoY to USD 7.12 billion, in absolute terms increasing by USD 791 million.
However, on a monthly basis, the head registered a growth of 11% reaching USD 1.13billion in December 2012.
Such increase was however misleading, emanating from a low base effect of November, 2012, rather than depicting an actual increasing trend.
“The country witnessed a huge influx of remittances, touching USD 1.37 b, in October, 2012, due to the Eid factor,” viewed Abdul Azeem at the InvestCap Research.
Following this, the analyst said, remittances in November, 2012, remained extraordinarily depressed at the level of USD 1.02 billion thus leading to a low base effect in December, 2012.
The huge chunk of remittances received from the Middle East continued to play a significant role in the overall inflows into the country.
Within this region, the major oil economy, Saudi Arabia remained the key contributor with 28% weight in total remittances; remittances from Saudi Arabia posted a growth of 18% YoY to USD 1.96 billion during the first half of FY13. One of the strongest economies of the world, Saudi Arabia continued to import employees from Pakistan, therefore, a positive impact was observed in remittances from this country.
Another region of the Middle East, United Arab Emirates also remained a key source of remittances as it maintained 21% weight in total remittances from where the over all remittances increased by 3% YoY to USD 1.46 billion in the first half of FY13.
Amongst the Western countries, USA was the most important contributor, accounting for 16% share in the total home remittances although the growth was flat (0.5% YoY) but inflow of USD 1.16 billion was witnessed during the first six months of FY13. Furthermore, remittances coming in from the UK experienced massive growth of 38% YoY during the same period. UK ranked second amongst the major contributors to increase in remittances in the first six months of FY 13.
“We expect the consistent upward trend in remittances to provide support to the current account (C/A) during the remaining period of FY13,” Azeem said.
However, he warned, IMF payments were likely to exert pressure on the current account deficit, as the country has to pay USD 1.7billion during the second half of FY13.
Although, lower imports and rising exports continue supporting the trade deficit, in the latter half of FY13, we expect a significant draw back to be evident in the form of shortage of gas, absorbing any such positives. We foresee such shortage to injure exports of the country, mainly the textile sector, being a major contributor to the country’s exports.