Pakistan remittances near $34bn as Gulf reliance raises external risks

ISLAMABAD: Pakistan received nearly $34 billion in workers’ remittances during the first 10 months of the current fiscal year, with a large share coming from Saudi Arabia, the United Arab Emirates and other Gulf states, a trend that analysts say leaves the country exposed to external shocks at a time of heightened regional uncertainty.

According to the State Bank of Pakistan, remittances amounted to $3.54 billion in April 2026, showing an 11% increase compared with the same month last year, though they were down 8% from March. Cumulative inflows in 10MFY26 reached $33.86 billion, up 8.5% year-on-year.

Official data showed that Saudi Arabia, the UAE and other Gulf Cooperation Council countries together sent more than $18 billion during the period, accounting for well over half of Pakistan’s total remittance inflows. Saudi Arabia contributed $7.93 billion, while remittances from the UAE stood at $7 billion.

The concentration of inflows from one region has drawn attention as tensions in the Middle East continue to rise. Concerns have also increased amid reports of the UAE withdrawing its $3 billion support facility from Pakistan and expelling some Pakistanis.

Waqas Ghani Kukaswadia, Head of Research at JS Global, said the country’s external position remained under pressure as the fiscal year moved toward its close. "The external account outlook remains fickle as FY26 approaches closure. With crude oil prices elevated and import momentum likely to persist, the current account faces material pressure that domestic production cannot offset. In this context, remittances have transitioned from a supporting buffer to an essential stabiliser. Should inflows weaken, particularly from the GCC region where concentration risk is acute, the external account could slide into deficit again."

Pakistan has long depended on overseas workers, especially in Saudi Arabia and the UAE, to support its balance of payments. These inflows often help offset a substantial part of the trade deficit, which has widened again this fiscal year amid a recovery in industrial activity and higher energy imports.

Analysts said higher oil prices can, in the short term, support Gulf economies and sustain labour demand. However, they also noted that prolonged conflict or economic disruption in the region could create uncertainty for migrant jobs and remittance flows.

Kukaswadia said the country’s foreign exchange reserve targets had already been revised downward by about $1 billion, increasing reliance on external financing and stable remittance inflows. "The margin for error is thin," he added.

Brokerage firms said remittances remain among the few consistently stable elements of Pakistan’s external sector at a time when exports continue to face structural competitiveness problems. In a research note, Topline Securities projected FY26 remittances at around $41 billion, up 7% from FY25 levels of about $38 billion. The brokerage linked the latest annual increase partly to festive-related inflows and the continued formalisation of transfer channels.

Analysts also said Pakistan’s continued dependence on labour exports rather than stronger productive exports points to deeper structural weaknesses in the economy. They noted that human capital exports are increasingly compensating for weak merchandise exports, while also making the country more vulnerable to labour market changes and immigration policies in host countries.

The risks are particularly relevant as Gulf states move ahead with labour nationalisation programmes to increase local employment. Measures such as Saudisation and Emiratisation have already altered hiring patterns in several sectors.

Economists also pointed to limited progress in broadening Pakistan’s remittance base, although inflows from Europe and North America have shown some improvement. Remittances from European Union countries rose 18% year-on-year in 10MFY26 to $4.35 billion, while inflows from the United Kingdom increased 8% to $5.17 billion. Analysts said these trends suggest growing migration diversification, especially among skilled workers heading to Europe, Canada and Australia.

Separately, Topline said Pakistan posted its highest-ever monthly gross inflows under the Roshan Digital Account in April 2026 at $321 million, compared with the six-month average of $239 million and the long-term average of $187 million since the scheme’s launch in September 2020. Net inflows under the RDA reached $293 million in April, against the previous six-month average of $214 million and an average of $157 million since inception.

In the financial markets, the rupee appreciated 0.01% against the US dollar in the inter-bank market on Monday, closing at Rs278.67, up Rs0.03 from Friday’s close of Rs278.70. Gold prices fell by Rs5,300 to Rs488,362 per tola, while the rate for 10 grams dropped by Rs4,544 to Rs418,691, according to the All-Pakistan Gems and Jewellers Sarafa Association. In the international market, gold declined by $53 to $4,660 per ounce. Silver prices were unchanged at Rs8,513 per tola.