World Bank Migration and Development Brief estimates that the remittances into Pakistan grew by 26 percent during the year 2021.
“Pakistan had another year of record remittances with growth at 26 percent and levels reaching $33 billion in 2021,” says the report released by WB. In addition to the common drivers, the government’s ‘Pakistan Remittance Initiative’ to support transmission through formal channels attracted large inflows it says adding the Afghanistan’s fragile situation emerged as an unexpected cause of remittances in 2021 intended for Afghan refugees in Pakistan as well as for families in Afghanistan.
According to the report, overall remittances to South Asia likely grew around 8 percent to $159 billion in 2021. Higher oil prices aided economic recovery and drove the spike in remittances from the Gulf Cooperation Council (GCC) countries which employ over half of South Asia’s migrants. Economic recovery and stimulus programs in the United States also contributed to the growth.
For a second consecutive year, remittance flows to low- and middle-income countries (excluding China) are expected to surpass the sum of foreign direct investment (FDI) and overseas development assistance (ODA).
This underscores the importance of remittances in providing a critical lifeline by supporting household spending on essential items such as food, health, and education during periods of economic hardship in migrants’ countries of origin.
“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis. Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs. Factors contributing to the strong growth in remittance are migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the United States which in turn was supported by the fiscal stimulus and employment support programs.
Remittances are projected to continue to grow by 2.6 percent in 2022 in line with global macroeconomic forecasts. A resurgence of COVID-19 cases and reimposition of mobility restrictions poses the biggest downside risk to the outlook for global growth, employment and remittance flows to developing countries. The rollback of fiscal stimulus and employment-support programs, as economies recover, may also dampen remittance flows, it adds.