Saturday, October 8, 2016

Diaspora's 2016 Remittances to Pakistan Rise 5.1% to $20.5 Billion

Overseas Pakistanis sent home $20.5 billion in remittances in 2016, an increase of 5.1% over 2015, according to the World Bank. Pakistan's remittances are 7.5% of its 2015 GDP of $270 billion.

Pakistan's Declining Exports:

The increase in remittances from the diaspora is welcome news in Pakistan suffering from precipitous 12% decline of export earnings and gaping 35-year high trade deficit of $24 billion in 2016.

The World Bank report said 2016 remittances to India declined by 5% to $65.5 billion while Bangladesh received $14.9 billion, a decrease of 3.5% from the previous year.

Declining Remittances to South Asia: 

Remittances to  South Asia region as a whole declined by 2.3 percent in 2016, following a 1.6 percent decline in 2015. Remittances from the oil-rich GCC countries continued to decline due to lower oil prices and labor market ‘nationalization’ policies in Saudi Arabia, according to the report.



Top Recipients of Remittances: 

The top recipients of remittances in 2016 are, India ($65.%b), China ($65.2b), the Philippines ($29.1b), Mexico ($28.1b) and Pakistan ($20.3b) and, in terms of remittances as a share of GDP, Nepal (32.2%), Liberia (31.%), Tajikistan (28.8%), Kyrgyz Republic (25.7%) and Haiti (24.7%).

Pakistan is not alone in seeing its exports decline amid weakness in world demand, particularly in Europe with its slowing economy. However, India's 2016 exports decline is much lower at 5.5% and India's trade deficit actually shrank.

Summary: 

Increase in remittances to Pakistan is good news, especially amid declining worldwide remittances. However, Pakistan can not continue to count on remittances from overseas workers in the midst of low oil prices affecting the GCC nations where millions of Pakistanis work. It must take urgent steps to boost exports and lower its trade deficit to avoid yet another bill-of-payments crisis requiring yet another IMF bailout.

Related Links:

Haq's Musings

Pakistani Diaspora

CPEC to Add Over 2 Million New Jobs in Pakistan

ADB Raises Pakistan GDP Growth Forecast

Is Pakistan Ready For War With India?

India's Israel Envy: Surgical Strikes in Pakistan?

Growing Middle Class in Pakistan

Rising Energy Consumption

China-Pakistan Economic Corridor

Pakistan's Thar Desert Sees Development Boom


5 comments:

Rizwan said...

How many developed countries depend on remittances to build their foreign exchange reserves? I thin it is shameful that Pakistan has to export labor in order to earn foreign exchange. Pakistanis should be able to have the CHOICE of whether they want to leave Pakistan or stay to make a living. They should not have to leave their homes and families just to survive.

Riaz Haq said...

Rizwan: "How many developed countries depend on remittances to build their foreign exchange reserves? "

Many many countries. It's called trade in services.


Most of what India claims as "software exports" is Indian H1B workers wages earned in the United States.

India has complained to the World Trade Organization about changes to the US H1B that mainly benefit India's body shops like Cognizant, Infosys and Tata at the expense of both US and Indian workers. US workers lose their jobs while Indian workers are exploited as wage slaves. India uses the wages of Indian H1B workers to inflate its IT export earning by as much as 20X. Proposed changes to H1B visa program like higher fees and lower numbers threaten India's export earning which have declined for 18 months in a row. The ongoing election debate over whether the H1B program is hurting American workers rose to public consciousness amid the Republican primary debates this year. The election outcome has the potential to negatively impact Indian H1B exports earnings.

http://www.riazhaq.com/2016/04/india-files-h1b-visa-complaint-against.html

Riaz Haq said...

#Pakistan's 3rd 340 MW #Nuclear Power Plant at #Chashma Goes Into Operation


http://www.voanews.com/a/pakistan-chinese-built-nuclear-reactor/3554623.html


Pakistan has connected its new, largely Chinese-built nuclear reactor to the national grid as part of broader plans to overcome long-running crippling power shortages.

The facility is located at Chashma, a town in the central province of Punjab, where China has constructed two other nuclear reactors, known as Chashma-1 and Chashma-2. They went into operation in 2000 and 2011 respectively, supplying 600 megawatts of electricity to the grid.

The so-called Chashma-3 project, with an installed capacity of 340 megawatts, was inaugurated “on trial basis” this past Saturday, according to a spokesman for the Pakistan Atomic Energy Commission (PAEC).

“After performing various safety and functional tests, the plant will attain full power in first fortnight of December 2016,” Shahid Riaz, told VOA Monday.

Canada helped Pakistan build its first nuclear power plant 44 years ago in the southern port city of Karachi, which Riaz said is currently generating around 80 megawatts of electricity.

Other projects

Pakistan is also constructing another two plants in Karachi with China’s help at a cost of around $10 billion scheduled to be completed by 2021, with a combined capacity of around 2,200 megawatts. Under the agreement, Beijing will also provide enriched uranium for fuel.

Islamabad’s so-called Energy Security Plan envisages a nuclear power production of around 8,800 megawatts by 2030 and 40,000 megawatts by the year 2050.

The deepening nuclear cooperation between the traditionally close allies comes amid reservations that Pakistan is not a signatory to the Nuclear Non-Proliferation Treaty (NPT), which binds member nations to ensure fissile materials are not used for making weapons.

Islamabad dismisses any such concerns.

Pakistan tested nuclear devices in 1998 in response to similar tests by arch-rival India. New Delhi also refuses to sign NPT.

Pakistani authorities maintain that all of their civilian nuclear facilities are under International Atomic Energy Agency (IAEA) safeguards and the country “voluntarily” observes a moratorium on nuclear testing.

Analysts see growing nuclear cooperation between the two countries as a response to the 2005 commercial deal between the United States and India.

Islamabad has since been unhappy about what it and criticizes it as a discriminatory U.S. approach and has been seeking a similar deal with Washington. Beijing sees the growing U.S.-India nuclear axis as a geopolitical challenge.

Beijing is also investing billions of dollars to build an energy corridor to link Western China and Pakistan’s southern deep-water port of Gwadar in the Arabian Sea. The $46 billion so-called China-Pakistan Energy Corridor (CPEC) will see construction of road and rail networks as well as power projects producing thousands of megawatts of electricity to help Pakistan overcome its energy crisis.

Riaz Haq said...

#Pakistan’s moment of opportunity Op Ed by visting #IMF Chief Chiristine Legard. #investment #debt #growth #exports https://www.thenews.com.pk/print/159423-Pakistans-moment-of-opportunity …

In this mixed global environment, Pakistan cannot rely exclusively on its trading partners to support growth. This means that the country will have to lean on the strength of its own policies. Four priorities are central.

First, make the economy more resilient. With uncertain global prospects, the economy needs to prepare for potential shocks that may come down the road. At 65 percent of GDP, Pakistan’s public debt remains too high, with too many resources going toward interest payments instead of public investment, education, and other growth-enhancing areas. The task at hand is to continue improving public finances while accumulating international reserves. In parallel, social safety nets need further strengthening to protect the most vulnerable segments of society.

Second, raise growth. Pakistan can grow at faster rates than the current 4-5 percent per year. This will require higher investment and greater productivity growth. Public investment in infrastructure can help remove obstacles to economic activity, and the China Pakistan Economic Corridor is a very good opportunity. With careful management of its financing arrangements, it can be a transformative success. Yet, the private sector also needs to step up in strengthening economic prospects.

Today, private investment in Pakistan accounts for only 10 percent of the economy – much below the average of 18 percent for emerging markets. Completing energy sector reforms and improving governance and the business climate will be crucial to enable faster private sector growth.

Third, the quality of growth matters. Economic growth in itself is not enough unless its fruits are broadly shared among the population. Two dimensions are very close to my heart: education and gender issues. More than six million children of primary school age, including 3.5 million girls, are currently out of school. Higher spending on public education is clearly important, but so are improvements to the quality of education. The country needs to ensure access to opportunity for all segments of society and equip its people with the skills needed for tomorrow’s job market.

Similarly, with only a quarter of women participating in the labour force, Pakistan can add significantly to its growth potential by integrating women better into the economy. This will make growth not only more inclusive, but also higher. IMF studies have shown that closing the gender gap could boost Pakistan’s GDP by almost one third.

Finally, believe in the global system. Pakistan’s exports are only about a quarter of what they could be based on the experience of emerging markets. There is vast untapped potential to trade with neighbours and integrate into global value chains. A sustained focus on regional and international engagement can help realise this potential.

I am confident that Pakistan can seize this moment of opportunity and transform itself into a dynamic, vibrant, and integrated emerging market country. Over the coming years, a stable and vibrant economy that creates sustainable jobs and spreads the fruits of growth more widely can be a strong force for overall domestic stability. The same applies to trade and cross-border investments, which tend to bring people together in the pursuit of mutual economic advantages, and can provide a stabilizing force in the region.


Riaz Haq said...

Global worker #remittances to #India down 8.9%. #Kerala worst hit. 36% of state's economy depends on remittances.

http://m.todayonline.com/chinaindia/india/gulf-woes-resound-across-south-asia-worker-remittances-drop

For 16 years, Mr Jobby Peter has supported his family back home in India by working in the bustling, oil-driven economies of the Gulf. In his most recent job, the 41-year-old welder was earning nearly US$500 (S$695) a month fabricating oil tanks in Dubai’s Jebel Ali Free Zone.
But four months ago, he abruptly found himself unemployed when he and 40 co-workers, all from south Asia, were told their services were no longer required. Low oil prices had hit orders, and the fabrication unit was being shut down.
“They told us, ‘All of you have to go back because we have no demand any more,’” said Mr Peter, who was given three months’ salary and a ticket back to India.
Today, he is working occasionally in a Cochin shipyard while trying to get back to the Gulf. One recent Saturday, he was among nearly 1,000 people queueing for interviews with construction companies recruiting skilled workers for a clutch of welding jobs in the region. “I am trying,” he said. “I am hopeful.”
But Mr Peter’s hopes may be misplaced. For nearly two decades, millions of workers from India and other south Asian countries, including Nepal, Bangladesh and Pakistan, have looked to the oil-driven economies of the Gulf Co-operation Council for jobs and salaries that are unavailable at home. But low global oil prices and cash-strapped Gulf countries’ efforts to find employment opportunities for their own citizens, are reversing that tide.
Construction work has been hit by a severe liquidity squeeze, leading to lay-offs of foreign workers, some of whom have been left stranded in the desert by their former employers. Meanwhile, service industry jobs previously undertaken by foreign workers, such as positions as shop assistants and mobile phone repair technicians, have been reserved for locals as Gulf economies pare their social welfare schemes.
For foreign workers who still have jobs, wages are also under pressure as employers attempt to freeze salaries and recruitment agencies look to poorer countries to hire workers.
“Wages in the Gulf will come down,” said Mr S Irudaya Rajan, a migration expert at Trivandurum’s Centre for Development Studies. “They will replace people with those that are willing to work for less, and that is where you will find remittances coming down.”
Migrant workers’ remittances to south Asia fell 6.4 per cent last year after years of steady increases. Remittances to India slumped 8.9 per cent in 2016 – the second consecutive year of decline – to US$62.7 billion, down from US$72 billion two years earlier.
Although remittances account for just 2.8 per cent of India’s gross domestic product (GDP), the decline is a blow to the southern state of Kerala, where they make up 36 per cent of the local economy.
“There is no household that doesn’t have some direct or indirect relationship to migrant workers in the Gulf,” said Mr Shashi Tharoor, a member of the national parliament from Kerala.
“Without this kind of money coming in, a lot of people’s lives are going to be seriously affected. We are going to be facing a very serious crisis if this trend continues.”