Pakistan's Demographic Dividend: Record Remittances From Overseas Workers

[RiazHaq]

Pakistan's Demographic Dividend: Record Remittances From Overseas Workers

Pakistan has received nearly $30 billion in worker remittances in fiscal year 2020-21, according to the State Bank of Pakistan . This is a ...

www.southasiainvestor.com

Pakistan has received nearly $30 billion in worker remittances in fiscal year 2020-21, according to the State Bank of Pakistan. This is a new record representing about 10% of the country's gross domestic product (GDP). This money helps the nation cope with its perennial current account deficits deficits. It also provides a lifeline for millions of Pakistani families who use the money to pay for food, education, healthcare and housing. This results in increase in stimulus spending that has a multiplier effect in terms of employment in service industries ranging from retail sales to restaurants and entertainment.

Overseas Pakistani Workers' Remittances. Source: Arif Habib

Pakistan's share of working age population (15-64 years) is growing as the country's birth rate declines, a phenomenon called demographic dividend. This dividend is manifesting itself in high levels of worker exports and record remittances pouring into the country. Saudi Arabia and the United Arab Emirates(UAE) are the top two sources of remittances but the biggest increase (58%) in remittances is seen this year from Pakistanis in the next two sources: the United Kingdom and the United States.

Pakistani Workers Going Overseas. Source: Bureau of Emigration

Over 10 million Pakistanis are currently working/living overseas, according to Bureau of Emigration. Before the COVID19 pandemic hit in 2020, more than 600,000 Pakistanis left the country to work overseas in 2019. The average yearly outflow of Pakistani workers to OECD countries (mainly UK and US) and the Middle East has been over half a million in the last decade.

Pakistan Demographics

About two million Pakistanis are entering the workforce every year. The share of working age population in Pakistan is increasing while the birth rate is declining. This phenomenon, known as demographic dividend, is coinciding with declines in working age populations in developed countries. It is creating an opportunity for over half a million Pakistani workers to migrate and work overseas, and send home record remittances.

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Pakistan's Demographic Dividend: Record Remittances From Overseas Workers

Pakistan has received nearly $30 billion in worker remittances in fiscal year 2020-21, according to the State Bank of Pakistan . This is a ...

www.southasiainvestor.com

 

[Dr-who]

Whats the reason for the largest growth of remittance from USA & uk?

 

[RiazHaq]

Whats the reason for the largest growth of remittance from USA & uk?

Not sure but I do know the education, skill levels and earnings of Pakistanis in the US are higher than their counterparts in the Middle East.

US Census: Pakistani-Americans Are Young, Well-educated and Prosperous

News, analysis and opinions about India, Pakistan, US, Canada, Europe, Mid East, South Asia, Silicon Valley, High Technology, Economy, Politics, World

www.riazhaq.com

 

[RiazHaq]

Six reasons why remittances soared in South Asia during COVID-19

Six reasons why remittances soared in South Asia during COVID-19

Remittance flows are a major source of income for all countries in South Asia, larger than all other capital inflows combined.

blogs.worldbank.org

Tax incentives. Increasingly, policymakers want to encourage greater formal remittances. Pakistan and Bangladesh, which (along with Mexico) saw the highest surge in remittances in a sample of 45 developing countries, had recently introduced new remittance tax incentives. This one-off change may explain the high growth rate in 2020.

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Remittance flows are a major source of income for all countries in South Asia, larger than all other capital inflows combined. In 2019, India received more remittances than any other country in dollar terms, and Nepal ranked third in the world in terms of remittances to GDP at 27 percent. Remittances seem to have been even more essential during the COVID-19 pandemic, increasing by 5.2 percent in 2020 in South Asia. But this was somewhat surprising because household surveys globally showed remittances falling, especially in the second quarter of 2020.

So, what happened in South Asia? Many studies indicate that remittances tend to increase when receiving households experience disasters or recessions. However, since the COVID-19 shock was global in nature, both home (recipient) and foreign (sender) countries were impacted. Migrant workers, many of whom- in North America, the EU, and the Middle East- are employed mostly in contact-intensive services sectors were particularly hard hit by COVID-19.

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Our analysis in the World Bank’s latest South Asia Economic Focus shows that several factors help explain the large increase in remittances in 2020. Some also suggest there are great opportunities for policy interventions.

Savings repatriation. A portion of the recorded rise in remittances could represent repatriated savings of emigrants returning home after losing their jobs or not finding new opportunities. One example: Saudi Arabia granted less than 10,000 work visas per quarter in the first and third quarters of 2020, compared to an average approval rate of over 40,000.
Better capturing of remittance statistics. Remittances could have shifted from informal (unrecorded) to formal (recorded) channels. Part of the increase was just recording of flows unnoticed in the past in official statistics, not an actual increase . Before COVID-related travel restrictions, a significant share of remittances may have arrived through trips home by migrants or their trusted friends with cash in hand, gifts, etc. This was no longer an option during the pandemic.
Generosity. Dire economic conditions in South Asia could have encouraged greater giving by migrants’ close-knit family and community ties. South Asian countries rank high compared to other middle-income countries on a measure of altruism based on FINDEX . Current giving campaigns by diaspora amid the health crisis in India suggest this altruism is alive and well in 2021!
Financial innovation. The shift to more formal channels was facilitated by the accelerated development of Fintech and digital transfer apps such as G-pay and Alipay, which have made the digital transfer of funds more accessible and cheaper per transaction, leading to an overall increase in remittances.
Tax incentives. Increasingly, policymakers want to encourage greater formal remittances. Pakistan and Bangladesh, which (along with Mexico) saw the highest surge in remittances in a sample of 45 developing countries, had recently introduced new remittance tax incentives. This one-off change may explain the high growth rate in 2020.
Host country transfers. Some migrants were able to access cash transfers offered by host country governments, which would allow then to send home higher amounts than normal (e.g., stimulus payments in the United States).

 

[Asimzranger]

I think because of covid uncertainty most start investing back home. Also freelance work has increased and most are getting there pay through remittance.

 

[RiazHaq]

India received over USD83 billion in remittances in 2020, a drop of just 0.2 per cent from the previous year, despite a pandemic that devastated the world economy, according to a World Bank report.

India received $83 billion in remittances in 2020: World Bank report

China, which received USD59.5 billion in remittances in 2020 against USD68.3 billion the previous year, is a distant second in terms of global remittances for the year gone by, as per the latest World Bank data released on Wednesday.

indianexpress.com

China, which received USD 59.5 billion in remittances in 2020 against USD 68.3 billion the previous year, is a distant second in terms of global remittances for the year gone by, as per the latest World Bank data released on Wednesday.

In 2019, India had received USD83.3 billion in remittances.

The report said India’s remittances fell by just 0.2 per cent in 2020, with much of the decline due to a 17 per cent drop in remittances from the United Arab Emirates, which offset resilient flows from the United States and other host countries.


In 2019, India had received USD83.3 billion in remittances.
India received over USD83 billion in remittances in 2020, a drop of just 0.2 per cent from the previous year, despite a pandemic that devastated the world economy, according to a World Bank report.

×
China, which received USD 59.5 billion in remittances in 2020 against USD 68.3 billion the previous year, is a distant second in terms of global remittances for the year gone by, as per the latest World Bank data released on Wednesday.

In 2019, India had received USD83.3 billion in remittances.

The report said India’s remittances fell by just 0.2 per cent in 2020, with much of the decline due to a 17 per cent drop in remittances from the United Arab Emirates, which offset resilient flows from the United States and other host countries.


India and China are followed by Mexico (USD42.8 billion), the Philippines (USD34.9 billion), Egypt (USD29.6 billion), Pakistan (USD26 billion), France (USD24.4 billion) and Bangladesh (USD21 billion), it showed.

In neighbouring Pakistan, remittances rose by about 17 per cent, with the biggest growth coming from Saudi Arabia, followed by the European Union countries and the United Arab Emirates.

In Bangladesh, remittances also showed a brisk uptick in 2020 (18.4 per cent), and Sri Lanka witnessed remittance growth of 5.8 per cent.

In contrast, remittances to Nepal fell by about two per cent, reflecting a 17 per cent decline in the first quarter of 2020.

The World Bank, in its latest Migration and Development Brief, said despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected.

Officially recorded remittance flows to low- and middle-income countries reached USD540 billion in 2020, just 1.6 per cent below the 2019 total of USD548 billion.

“As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

“Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants,” Rutkowski added.

 

[The Eagle]

Trolls should stay away from topic taunting this as a result of remittances by NRP.

 

[Crimson Blue]

Reason for increased remittances that no one likes to admit:


Pakistan manpower export: More than half a million people including 130,000 drivers went abroad for work in 2019: Gulf News

 

[CrazyZ]

Whats the reason for the largest growth of remittance from USA & uk?

I think its concerns with the future of the dollar. It now makes sense to diversify and have assets in Pakistan.