Pakistan’s workers’ remittances declined on a year-on-year basis in March 2026, signalling emerging external risks despite overall resilience, as analysts warn that rising geopolitical tensions in the Middle East could affect future inflows.
According to data released by the State Bank of Pakistan, remittances stood at $3.83 billion in March, down around 5% from $4.05 billion recorded in the same month last year. However, inflows rose 17% compared to February, reflecting short-term seasonal factors.
Cumulative remittances for the July–March period of FY26 reached $30.3 billion, marking an 8.2% increase year-on-year, indicating continued strength in overseas inflows despite recent fluctuations.
Analysts attribute the month-on-month rise largely to seasonal demand ahead of Eidul Fitr, when overseas Pakistanis traditionally send higher amounts to support family spending. Brokerage firm Topline Securities said the broader growth momentum remains intact due to increased manpower exports, a narrowing gap between formal and informal exchange rates, and ongoing government incentives encouraging remittances through official channels.
However, the firm cautioned that escalating tensions involving Israel, the United States and Iran could create downside risks, particularly for flows originating from Gulf economies. It noted that the evolving regional situation may weigh on remittances in the coming months.
Echoing this view, Waqas Ghani Kukaswadia of JS Global said the March increase was “largely seasonal” and that April and May figures would provide a clearer picture, especially from Gulf Cooperation Council countries, provided the ceasefire holds.
Country-wise data highlights Pakistan’s reliance on Gulf economies. In March, inflows from Saudi Arabia totalled $918 million, while the United Arab Emirates contributed $823.7 million. Over the nine-month period, Saudi Arabia remained the largest source with $7.08 billion, followed by the UAE at $6.27 billion.
Other major contributors included the United Kingdom with $4.60 billion and the United States with $2.66 billion, though inflows from the US declined by 5.7% year-on-year. Meanwhile, the European Union emerged as a growing corridor, with remittances rising nearly 20% to $3.91 billion, driven by countries such as Italy, Spain and Germany.
Experts caution that reliance on a limited number of regions—particularly the Gulf—makes Pakistan vulnerable to external shocks, including geopolitical instability, oil price volatility and economic slowdowns in host countries.
Dr Abid Qaiyum Suleri of the Sustainable Development Policy Institute said the March dip alone does not indicate stress, noting that overall growth remains strong. However, he added that the situation has become more exposed to external pressures.
Remittances remain a critical pillar of Pakistan’s economy, supporting foreign exchange reserves, stabilising the currency and sustaining household consumption. Over the past five years, more than three million Pakistanis have moved abroad in search of better opportunities, contributing significantly to inflows.
Their importance has grown further amid widening external imbalances. Data from the Pakistan Bureau of Statistics shows the trade deficit expanded by 22.65% to $27.81 billion during the first nine months of FY26, increasing reliance on remittances to support macroeconomic stability.
Looking ahead, analysts expect inflows to remain broadly stable but vulnerable to geopolitical risks. Topline Securities projects total remittances of around $41 billion for FY26. While surpassing $42 billion may be challenging, inflows are expected to remain above $40 billion, supported by continued labour migration and policy measures.
However, the outlook remains closely tied to developments in the Middle East. A prolonged escalation could disrupt labour markets and reduce earnings of overseas workers, while a sustained ceasefire may help stabilise flows. For now, the March data presents a mixed picture of steady growth tempered by rising external uncertainties.
