Sunday, May 1, 2022

European Union: Fastest Growing Source of Remittances to Pakistan

Remittances from the European Union (EU) to Pakistan soared 49.7% in FY 21 and 28.3% in FY22, according to the State Bank of Pakistan. With $2.5 billion remittances in the first 9 months (July-March) of the current fiscal year, the EU ($2.5 billion) has now surpassed North America ($2.2 billion) to become the third largest source of inflows to Pakistan after the Middle East and the United Kingdom. Remittances from the US have grown 21%, second fastest after the EU (28.3%) in the first 9  months of the current fiscal year. 

Country-wise Remittance Inflows in Pakistan. Source: State Bank of Pakistan

Pakistanis in European Union: 

The population of Pakistan-born migrants to European Union countries has been growing in recent years. With over 120,000 Pakistani migrants, Italy is the most popular destination for Pakistanis in the EU. 

Italy is followed by Germany with 75,495 Pakistani migrants. Then comes Spain with 61,953 migrants, France 21,900 (2017), Sweden 11,674, Denmark 10,669, Ireland 7,351 (2016), Belgium 5,927, Portugal 5,310, Norway 5,157, Netherlands 4,723 and Austria 4,112. There are smaller populations of Pakistanis in several other European countries. 

Pakistan-born Migrants in European Union. Source: OECD

With $5.74 billion in the first 9 months of current fiscal year FY22, Saudi Arabia remains the top source of remittances to Pakistan, followed by $4.28 billion from the United Arab Emirates (UAE). However, the Saudi remittances are essentially flat while those from the UAE have declined 5.3% in this period.  Pakistani diaspora is sending home over $30 billion a year, about 10% of the country's GDP. It is badly needed foreign exchange to balance Pakistan's external accounts.  

Pakistan's Worldwide Diaspora:

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.  

Pakistan’s economy created 5.5 million domestic jobs during the past three years –on an average 1.84 million jobs a year, which is far higher than yearly average of creation of new jobs during the 2008-18 decade, according to the Labor Force Survey (LFS) published by the Pakistan Bureau of Statistics (PBS). 

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
Pakistan's Demographic Dividend: 

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. These overseas Pakistanis are now sending home over $30 billion a year, about 10% of the country's GDP. It is badly needed foreign exchange to balance Pakistan's external accounts.  

Projected Population Decline in Emerging Economies. Source: Nikkei Asia



7 comments:

samir sardana said...

Rising Oil and Gas is going to wipe out EU

Inflation and unemployment will rise.Govtt will cut costs and subsidies - will outsource,and look for cheap labour,with limited welfare benefits.

There will a vast shortage of labour,at competitive rates

That is a new opening for Pakistani labour.On the 1 side,you have Qatar and Saudi - where Oil and Gas,will secure Pakistani jobs - and on the other, the decimation of EU industry - which will lead to a boom in low cost labour.

Also,to offset the Oil and Gas hikes and power costs - what can EU do ? EU people may not want their lands littered with Wind and Solar.

Solution - EU to make massive investments in Pakistani wind corridors - sell to Grid - repatriate the gains - and use that to offset EU power subsidies

Pakistani Wind farms,are set up by conglomerates,who can set off the accelerated depreciation,on the wind project,per se, as the farm is set up,as part of an existing industry,or by merging the brought forward tax assessed losses of the wind farm,or by a tax provision,which allows the depreciation of a Wind-SPV, to be offset with the taxable profits of the holding company.

BUT THIS IS NOT ENOUGH

Pakistan has to bring in foreign capital.In many parts of the US/EU,people do not want Wind,and also,in sub zero temperatures,like in Texas,the Wind energy is a flop.

These investors need wind corridors,in hot and humid zones,in high cost power grids,with no humans or agri or plantations.

Pakistan is the ideal bet for them.

Treat Wind power as a Deemed Export (as you save imported oil and gas)- allow capital goods imports at Nil duty,and a tax holiday for 10 years - with the year of start of the holiday, to be chosen by the farm at any time,in the 1st 5 years.In addition,maximum repatriation of profits and affix the tarriff in USD - as a proxy to imported oil and gas - so that the investors is insulated from PKR-USD.

Based on deemed exports - refund all indirect taxes or allow the wind farm to TRANSFER THE INDIRECT TAX PAID by the wind farm on purchases - to any Pakistani,who can use 85% of the tax as a VAT input credit.

To obviate the need for spinning power to offset wind-solar variations,better to provide incentives to farm,as the wind-solar hybrids,can be used to perpetually pump water - even where the water table in deep.Once the water comes out - THE ENTIRE ECONOMIC CYCLE STARTS.

HOT AND HUMID ZONES - ARE IDEAL FOR WIND GENERATION - 24 HOURS A DAY

Thw issue is NOT that the land of the wind farms,is to be used for SPV farms or CSP or agri - USE THEM FOR ALL THREE ! IF WATER REACHES BALOCHISTAN - IT WILL BECOME A BRAZIL/ARGENTINA (IN TERMS OF AGRI).dindooohindoo

Zen, Munich said...

@Riaz

This ia a very interesting and refreshing article, because it presents a completely overlooked hypothesis.

https://asiatimes.com/2022/04/demographics-push-china-india-russia-triple-entente/

As you love data, there is some data as well, though not particularly optimistic for Pakistan.

Regardless of that article, I am of the opinion that anti Muslim hostility coming from democratic - which in current world order are non Muslim - countries have largely to do with angst of an ageing population.

Muslims from South Asia and Africa have nothing to offer in return - neither skilled workforce, nor surplus capital, which means they become unwanted human capitals (a racist Polish politician called Syrian refugees "human garbage" during migrant crisis). Even though that term is barely used, this is how majority sees unwanted Muslim immigrants from Africa and Afghanistan. Automation of menial jobs means that even a last avenue is slowly becoming inapplicable.

Riaz Haq said...

SBP
@StateBank_Pak
Remittances crossed the monthly mark of US $3 billion for the first time. Cumulatively, at $26.1 billion, remittances grew by 7.6 % in the ten months of FY22 compared to last year.

https://www.sbp.org.pk/ecodata/Homeremit.pdf

https://twitter.com/StateBank_Pak/status/1525003527818469378?s=20&t=mxMP2xDzZxS6JamTtFHE0g

----------------

Arif Habib Limited
@ArifHabibLtd
Monthly remittances reach highest ever during Apr’22, up by 12% YoY

Apr’22: $ 3.13bn, +12% YoY | +11% MoM
10MFY22: $ 26.08bn, +8% YoY

https://twitter.com/ArifHabibLtd/status/1525007593323765760?s=20&t=F8npzRfgFy_5U14SHx-WRw

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KARACHI, Pakistan : Remittances from Pakistani workers employed abroad exceeded a record $3 billion in April, the central bank said on Friday as the country’s foreign reserves dwindled to $16.37 million due to external debt payments.

https://www.channelnewsasia.com/business/pakistans-remittances-hit-all-time-monthly-high-3-billion-april-2683406

“Remittances in April (were) $3.1 billion..., crossing $3 billion for the first time ever,” the State Bank of Pakistan said in a statement.



The surge in remittances have been critical in restraining rises in the current account deficit though it has swelled to $13.1 billion in the first nine months of fiscal year 2022.

In terms of growth, remittances in April increased by 11.2 per cent on a month-on-month basis and 11.9 per cent year-on-year.

Cumulatively, at $26.1 billion, remittances grew by 7.6 per cent during the first 10 months of fiscal year 2022, compared with the 2021 fiscal period, the central bank statement said.

Pakistan is in dire need of external financial support due to a widening current account deficit with foreign reserves down to $10.37 million held by the central bank as of May 6 - equivalent to less than two months of imports.

Another $6.06 million in foreign reserves was held by commercial banks as of last week.



Prime Minister Shahbaz Sharif took over last month after a parliamentary no-confidence vote ousted his predecessor Imran Khan, who was blamed for mishandling the economy.

Sharif's government, however, has yet to implement reform policies such as curtailing costly energy subsidies, which were introduced by Khan's government in his last days in power as he faced mounting pressure over soaring inflation.

Remittances came mainly from Saudi Arabia with $707 million, the United Arab Emirates with $614 million, Britain with $484 million and the United States with $346 million, the central bank said, citing cumulative figures.

Riaz Haq said...

Ali Farid Khwaja
@afkhwaja
·
3h
This is the total dollar inflow in Pakistan over the past 5 years. Look how less important IMF/US/China/Saudi are compared to inflows from overseas Pakistanis. If only we gave them this much importance !

https://twitter.com/afkhwaja/status/1525107929397047297?s=20&t=mxMP2xDzZxS6JamTtFHE0g


FY17-22E

Remittances: $145 billion

Saudi Arabian Support $10 billion


IMF $4.5 billion


China $4.3 billion

US FDI $805 million

Riaz Haq said...

Pakistani Population in Europe
Pakistan has the 6th largest diaspora in the world, with 8-10 million people living or settled outside Pakistan. As per the Ministry of Overseas Pakistanis and HRD report 2017, an estimated 8.8 million Pakistanis live abroad or outside Pakistan.

According to the Ministry of Overseas Pakistanis and Human Resource Development, approximately 2 million Pakistanis live in Europe according to December 2017 estimates, with the vast majority, over 1.5 million, residing in the United Kingdom. Italy, Germany, Spain, and France are other countries in Europe with sizeable Pakistani populations.

As per the estimates, the Pakistani Population in European Union in 2022 is 0.5 million.

Source: Ministry of Overseas Pakistanis and HRD report 2017


https://www.findeasy.in/pakistani-population-in-european-union/

# EU Country Overseas Pakistani population
1 Germany 124,000
2 Italy 122,884
3 France 104,000
4 Spain 91,632
5 Norway 39,257
6 Greece 34,177
7 Denmark 25,661
8 Sweden 24,631
9 Netherlands 23,855
10 Belgium 19,247

Riaz Haq said...

Pakistanis in EU

https://www.findeasy.in/pakistani-population-in-european-union/

Pakistanis in Germany
Pakistani Diaspora in Germany also referred to as Pakistani Germans are estimated at 124,000 (1.25 lakh). The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

Almost a third of all Pakistanis in Germany live in Hesse. There are approximately 1900 Pakistanis living in the northern city-state of Hamburg, about 1500 in Frankfurt am Main and almost 1400 in Berlin and its suburbs. Many young Pakistanis have come to Germany recently as students of science and technology in prestigious universities.

Pakistanis in Italy
Pakistani Diaspora in Italy is estimated at 122,884 (1.25 lakh). The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

Most of the workers are of Punjabi background and account for 72 percent share of migrants in 2016 and 76 percent in 2017. According to the Italian ambassador to Pakistan, Andreas Ferrarese, as of February 2021, there are around 200,000 Pakistanis in Italy, of the 140,000 are documented.

Pakistanis in France
Pakistani Diaspora in France is estimated at 104,000 (1.04 lakh). The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

There is a population of Pakistanis in France, primarily of Punjabi origin from Punjab and Azad Kashmir. Large-scale Pakistani migration to France began in the 1970s; they clustered around the Rue du Faubourg-Saint-Denis in the 10th arrondissement of Paris, where many set up grocery stores and restaurants.



According to the latest official statistics published by the French government, there were 24,305 Pakistani-born people living in the country in the year 2015, also there were 19,646 Pakistani nationals living in France in 2015

Pakistanis in Spain
Pakistani Diaspora in Spain is estimated at 34,177. The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

Spain has a population of approximately 46.5 million, of which 9.5% are foreigners. Pakistanis are 1.2% of all foreigners and barely 0.1% of the population in Spain and more than half of all Pakistanis in Spain are in Barcelona.

Pakistanis in Norway
Pakistani Diaspora in Norway is estimated at 39,257. The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

Around half of the Pakistani population in Norway are Punjabis and 65.23% of Pakistanis in Norway live in the capital Oslo. The earliest Pakistani migrants came to Norway in the 1960s and 1970s as migrant workers, a large portion from Punjab.



Pakistanis in Greece
Pakistani Diaspora in Greece is estimated at 39,257. The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

According to official figures, some 700,000 legal immigrants make up 6.5 percent of Greece’s population. The size of the Pakistani community, one of the largest, is estimated to be about 80,000-strong; only 30,000 of them are in Greece legally.



Pakistanis in Denmark
Pakistani Diaspora in Denmark is estimated at 25,661. The number is based on the Dec. 2017 report on Overseas Pakistani by the Ministry of Overseas Pakistanis and Human Resource Development.

The earliest Pakistani migrants came to Denmark in the 1960s and 1970s as migrant workers, a large portion from Punjab. Danish Pakistanis form the country’s fifth-largest community of migrants and descendants from a non-Western country, with 14,379 migrants and 11,282 locally born people of Pakistani descent as of 1 January 2019 according to the latest figures published by the government of Denmark.

Riaz Haq said...

Highest ever oil import bill for the month of April 2022 amid 72% YoY jump in Arab Light prices along with 28% YoY volumetric growth.

Apr’22: $ 2.2bn, +94% YoY, +19% MoM
10MFY22: $ 17.0bn, +96% YoY

https://twitter.com/arifhabibltd/status/1525883734138003457?s=21&t=mKZ4thMugbEOJifLndhg1A

Workers’ remittances up 7.7pc to $26.1bn in 10 months

https://profit.pakistantoday.com.pk/2022/05/13/workers-remittances-up-7-7-to-26-1bn-in-10-months/

Exports grow by 25.46pc to $26.228 billion in 10 months


https://www.app.com.pk/business/exports-grow-by-25-46pc-to-26-228-billion-in-10-months/
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Arif Habib Limited
@ArifHabibLtd
Trade deficit increased by 65% to USD 39.3bn during 10MFY22

Textile Exports: $ 16.0bn, +26% YoY
Petroleum Imports: $ 17.0bn, +96% YoY
Agriculture and others: $ 12.1bn, +67% YoY
Transport Imports: $ 3.7bn, +60% YoY

https://twitter.com/ArifHabibLtd/status/1525873729749798913?s=20&t=Ssqo_-kw9_792ptmvNU1kw