Pakistan, India among world's top recipient of remittances in 2024

India will be the largest recipient of remittances in 2024 while Pakistan will come in fifth place after Mexico, China, and Philippines, according to a recently released World Bank report.

India will receive an estimated inflow of $129 billion, followed by Mexico with around $68 billion, China $48 billion, Philippines $40 billion, and Pakistan $33 billion.

In smaller economies, remittance inflows represent very large shares of gross domestic product (GDP), highlighting the importance of remittances for funding the current account and fiscal shortfalls.

Topping the list (in terms of percentage of GDP) is Tajikistan with about 45% of GDP, followed by Tonga 38%, Nicaragua 27% , Lebanon 27%, and Samoa 26%.

What's behind the recovery in remittances?

The World Bank further said the recovery of the job markets in high-income countries of the Organization for Economic Co-operation and Development (OECD), following the onset of the COVID-19 pandemic, has been the key driver of remittances.

This is especially true for the United States where the employment of foreign-born workers has recovered steadily and is 11% higher than the pre-pandemic level seen in February 2020.

By contrast, the employment level of native-born workers has recovered to the same level as before the pandemic. A similar pattern is seen in the case of Hispanic workers, which is a key factor for the strength of remittance flows to the Latin America and the Caribbean region.

By region, remittance flows to South Asia have been expected to register the highest increase in 2024, at 11.8%, driven mainly by continued strong flows to India, Pakistan, and Bangladesh.

Remittances to the Middle East and Africa are estimated to have increased 5.4%, primarily due to rebounded flows to Egypt, compared with a 14.6% decline in 2023.

Remittances — Pakistan's backbone

Pakistan Finance Minister Muhammad Aurangzeb, in a recent press briefing, expressed confidence that remittances would be recorded at a historic high of $35 billion this fiscal year. Remittances in Pakistan play a pivotal role in improving the balance of payment position. The recent current account numbers reflected the strength of inflows beside exports.

The current account showed surplus for the fourth consecutive month amounting to $729 million in November where in five months of the current it showed a surplus of $944 million as against current account deficit of $1.676 billion of the same period last year, showing recent data of State Bank of Pakistan.

The turnaround was maintained mainly because of remittance flows in the country. The remittance in November amounted to $2.9 billion, showing a jump of 32% while in the five months ended November 30, remittance flows recorded an increase of 34% to $14.766 billion.

The average arrivals worked out to be $2.9 billion, if this trend continues the flows would likely touch $34.8 billion, beating the forecast of World Bank, an analyst said. During FY24, the average forecast in five months was around $2.6 billion while in FY23 it was around 2.2 billion.