Pakistan's Demographic Dividend: Record Remittances From Overseas Workers

[Riaz Haq]

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. 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 an 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 the 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. 

 

Worker Remittances as Percentage of Pakistan GDP. Source: World Bank

Pakistan ranks 6th among the top worker remittance recipient countries in the world.  India and China rank first and second, followed by Mexico 3rd, the Philippines 4th, Egypt 5th and Pakistan 6th.  

 

Pakistan Demographics

About two million Pakistanis are entering the workforce every year. The share of the 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. 

Projected Population Decline in Emerging Economies. Source: Nikkei ...

Related Links:
Haq's Musings

South Asia Investor Review

Pakistan is the 7th Largest Source of Migrants in OECD Nations

Pakistani-Americans: Young, Well-educated and Prosperous

Inspirational Story of Karachi Rickshaw Driver's Daughters

Pakistan Remittance Soar 21X

Pakistan's Growing Human Capital

Two Million Pakistanis Entering Job Market Every Year

Pakistan Most Urbanized in South Asia

Hindu Population Growth Rate in Pakistan

Do South Asian Slums Offer Hope?

How "Illiterate" Are Pakistan's "Illiterate" Cell Phone Users?

Riaz Haq's Youtube Channel

PakAlumni: Pakistani Social Network

[Riaz Haq]

Pakistan's remittances reach all-time high of $4.1b in March 2025 | The Express Tribune

https://tribune.com.pk/story/2539793/pakistans-remittances-reach-al...

Pakistan received a record $4.1 billion in remittances in March 2025, the highest monthly inflow on record, State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Monday.

Addressing an event at the Pakistan Stock Exchange (PSX), Ahmad confirmed that the surge in inflows provided crucial support to the economy, foreign exchange reserves, and liquidity for importers.

This marks the first time that remittances have crossed the $4-billion threshold in a single month. The inflow represents a 37% increase year-on-year compared to $2.95 billion in March 2024. Month-on-month, remittances rose by nearly 30%, up from $3.12 billion in February 2025.

Between July 2024 and March 2025, Pakistan received $28 billion in workers’ remittances, reflecting a 33.2% increase from the $21.04 billion recorded in the same period of the previous fiscal year.

SBP governor projected that foreign exchange reserves would exceed $14 billion by June. He added that while foreign debt obligations for FY25 stand at $26 billion, the government expects $16 billion to be rolled over or refinanced, reducing net repayment pressure to around $10 billion.

The SBP governer further noted early signs of economic recovery, but said overall GDP growth for FY25 was now expected to be around 3%, down from earlier projections of over 4.2%, largely due to a weaker-than-expected agricultural season.

In January, Ahmad had said that Pakistan’s macroeconomic targets were on track, with debt levels and the balance of payments under control.

The central bank attributed the increase to enhanced formal banking channels, seasonal factors such as Ramadan-related giving, and exchange rate stability which encouraged legal transfers.

Remittances continue to play a critical role in supporting Pakistan’s external account, stabilising foreign reserves, and supplementing household incomes.

Remittances from other Gulf and European countries also contributed to the surge, though in smaller volumes.

The record inflow offers some short-term relief for Pakistan’s economy, which continues to face external financing pressures and inflationary challenges. Higher remittances are expected to support foreign exchange reserves, strengthen the rupee, and ease the trade and current account deficits.

The inflows are used by households to cover living expenses, healthcare, education, and housing, while also playing a critical role in mitigating external financing gaps.

The SBP also reported improved performance of digital and formal banking channels, noting that increased awareness campaigns and crackdowns on hawala/hundi networks have also redirected inflows through official routes.
-----------------------


Arif Habib Limited
@ArifHabibLtd
Remittances surged to an all-time high of USD 28.0 bn in 9MFY25, setting a new record for the nine-month period.

https://x.com/ArifHabibLtd/status/1911674210008641892