Do you send money to Pakistan? This article will look at how the Pakistani diaspora is helping Pakistan’s economy through the remittances they send back home while they work overseas.
People from developing countries travel abroad in search of better opportunities to ensure they earn better than what they have been earning in their respective countries of origin. The same is the case with the Pakistani diaspora, which sends remittances to help Pakistan’s struggling economy.
Let’s now take a look at how the Pakistani diaspora is helping its country’s economy.
Remittances sent to Pakistan have been on the steady rise since 2005. But the striking of Covid-19 pushed remittances downward, which is why they dropped from 5.747 billion USD in the third quarter of 2018 to 5.478 billion USD during the same period in 2019.
To augment an economy, the flow of money transfer to Pakistan is extremely important, depending on the following few factors.
Role of jobs:- Majority of Pakistani expatriates working in the Gulf states, Saudi Arabia and the UAE. The economies of these countries are dependent mostly on oil. Therefore, a slight fluctuation in the international oil market can have a deep impact on oil-related jobs. They become prone to losing jobs which can have negative effects on the remittance economy.
Methods:- How expatriates send their remittances back home is another factor that affects the economic impact of remittances. A large portion of the diaspora is formed by the labour, which thinks it safe to send money through banks using the conventional wire methods. This consumes more time than the latest methods offered by reputable online money transfer companies such as ACE. For example, if someone chooses to transfer funds through banks to Pakistan, they will have to wait for about five to seven working days for the funds to reach the destination. This time and delay in the transfer can have a substantially negative impact on the remittance economy. Whereas online money transfer to Pakistan is quick and convenient.
Now, let’s take a look at how remittances help Pakistan’s economy.
Foreign exchange:- Pakistan’s is a struggling economy, and it often faces the crises of trade deficit and balance of payment. In these tough circumstances, it is the remittances that prove to be a lifeline for its economy. People tend to keep the remittances in the foreign currencies they have been sent unless, of course, required otherwise. This gives a boost to the foreign currency reserves of the country.
Shock-absorbers:- Remittances are also known as shock-absorbers as they bear the pressure on trade deficits and balance of payment issues. They provide a cushion to absorb these pressures.
Guarantee against income shocks:- Remittances prove to be a guarantee against income shocks which are a routine in struggling economies such as Pakistan’s.
Increased consumption and investment:- These two basic components of growth, consumption and investments, are augmented by remittances as this money reaches a household directly and can be consumed through investments which can raise production, employment and the national production capacity eventually.
Less corruption:- Remittances reach the households directly without having to pass through other channels, increasing the chances of slippages, corruption, and embezzlement.
Conclusion:- From all of the above, we can safely conclude that the impact of remittances on Pakistan’s struggling economy is huge and cannot be stressed more. The only point is to ensure these funds are utilized properly and at exact times of utilization. A delay in remittances in the home country can lead to several investment opportunities being put to waste. Now, are you ready to send money to Pakistan online?