ISLAMABAD: Rising geopolitical tensions in the Middle East could threaten Pakistan’s crucial remittance inflows, a key pillar of the country’s external finances, according to a report released on Friday by Insight Securities.
Remittances have become increasingly important for Pakistan’s economy over the past two decades, now generating more foreign exchange than the country’s exports and helping stabilize its balance of payments. About 55 percent of Pakistan’s remittance inflows come from the Middle East, particularly the United Arab Emirates and Saudi Arabia, making the country vulnerable to economic disruptions in the region.
Pakistan sends millions of workers to Gulf economies, and the money they send home is a major source of foreign exchange.
“Remittances have now become one of the most important pillars of the economy, generating more foreign exchange than exports,” the report said.
The research note warned that geopolitical tensions involving the United States, Israel and Iran could weaken economic activity in Gulf economies and eventually slow remittance flows to Pakistan if the situation persists.
