Thursday, April 14, 2016

Pakistani Diaspora Sends Home $19.3 Billion in Remittances Amid Falling Oil Prices

Pakistani diaspora sent home $19.3 billion in remittances in 2015, representing 12.8 % increase over 2014, according to a World Bank Report titled "Migration and Development Brief" released today.

Pakistan's $19.3 billion in remittance make up 6.9% of 2014 GDP, essentially closing the rising trade deficit amid the nation's falling exports.

The 12.8% increase over 2015 is substantial but it is down from 16.7% jump seen in 2014 over 2013. The report attributes the slower remittance growth from Gulf Cooperation Council (GCC) countries like Saudi Arabia and United Arab Emirates to falling oil prices.

This report comes soon after the Panama Leaks that show how Pakistan's corrupt elite, including Prime Minister Nawaz Sharif's family, are moving and hiding in offshore tax havens the hard-earned dollars sent home by overseas Pakistanis to keep Pakistan's economy afloat.

Overseas Remittances in South Asia Source: World Bank 


In Q4 of 2015, year-on-year growth of remittances to Pakistan from Saudi Arabia and the UAE were 11.7 percent and 11.6 percent, respectively, a significant deceleration from 17.5 percent and 42.0 percent in the first quarter, said the report.

Global remittances, which include those to high-income countries, contracted by 1.7% to $581.6 billion in 2015, from $592 billion in 2014, the World Bank said.

India was the top recipient with $68.9 billion in remittances in 2015, a decline from $70 billion in 2014. This marks the first decline in remittances since 2009,  according to the report.

The growth of remittances in 2015 slowed from 8% in 2014 to 2.5% for Bangladesh, from 16.7% to 12.8% for Pakistan, and from 9.6% to 0.5% for Sri Lanka. “Slower growth may reflect the impact of falling oil prices on remittances from GCC countries,” the report said.

The only country in South Asia to see dramatic growth in remittances was Nepal. The overseas Nepalese workers sent home $7 billion in 2015, an increase of 20.9 percent in 2015 versus 3.2 percent growth in 2014. After the devastating earthquake that hit the Himalayan nation, many Nepalese migrant workers returned home to take care of their families, as the average number of returns at the airport jumped five times to around 4,000 per day.

“Remittances are an important and fairly stable source of income for millions of families and of foreign exchange to many developing countries,” said Augusto Lopez-Claros, director of the World Bank’s Global Indicators Group.

“However, if remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges including nutrition, access to health care and education,” Lopez-Claros said.


Related Links:

Haq's Musings

Remittances to Pakistan

Pakistani Names in Panama Leaks

Pakistan Diaspora is Among the World's Largest

Pakistan's Corrupt Elite

Remittances Offer a Lifeline to Pakistan's Poor

Aid, Investment, Trade and Remittances to Pakistan

8 comments:

Riaz Haq said...

#Pakistan service economy shows strong growth in 1H FY16: SBP. #Transport, #Telecom, #Finance, #Government sectors http://dailytimes.com.pk/business/15-Apr-16/services-sector-performance-positive-in-h1-sbp …

"While it is too early to make a robust assessment of services sector performance for the full year, most of the indicators suggestive a positive trend," said the SBP report.

Production and sales of commercial vehicles has registered a phenomenal growth during first half of the current fiscal year, on the back of the Apna Rozgar scheme launched by the Punjab government, and up tick in overall commercial activity in the country.

According to the report, the transport sector performance included a sharp increase in petrol sale, an increase in cargo handling at domestic ports and most importantly a drastic containment of losses borne by Pakistan Railways and Pakistan International Airlines.

Low oil prices and stable exchange rate have indeed played an important role in improving financial health of these public sector entities. Pakistan Railways has also gained from growing volumes of both freight as well as passenger transport.

In case of telecommunication sector, the report added, the role of increased usage of 3G/4G broadband services all across the country has been dominating, adding that the financial health of most telecom firms has improved, benefiting primarily from data revenues.

According to the report, cellular firms have also partnered with leading commercial banks in the country to support the penetration of Internet banking services. These firms also are actively participating in money transfer services all across the country. The reports said that the telecom sector is now playing a dominant role in modernising the country's payment system infrastructure, and is also contributing to the wider objective of enhancing financial including in the country for marginalised or unbanked segments of the society.

PTCL, the market leader, has continued to incur losses during first half, however, it has been able to reduce its losses compared to the same period of last year.

The financial and insurance sub-sector had recorded 6.1 percent growth during FY15, which was mainly driven by exceptional increase in profitability of commercial banks. These profits further increased during the first half of current fiscal year, however, its space remains significantly lower than the last year. The general government services had registered 9.5 percent growth against the annual target of 4.3 percent of FY15. This year, the sub-sector also is expected to end up registering a modest growth.

The wholesale and retail trade is likely to benefit from higher large manufacturing growth in first help compared to the same period of last year. The continuous increase in imports (especially non-oil) and domestic demand is also likely to keep trading margins intact while expectations of a bumper wheat crop on the back of strong yields will also benefit the wholesale and retail sectors.

Riaz Haq said...

#Pakistan's rising volume of lending a positive sign- all economic indicators up except exports down double digits
http://www.khaleejtimes.com/business/economy/pakistans-rising-volume-of-lending-a-positive-sign

The latest trend of rising volume of commercial lending to the private sector coupled with larger industrial output and better energy supply and rising FDI inflows are now signalling a significant uptick of the Pakistani economy in FY-2017 that starts from July 1. Commercial banks' lending to the private sector rose by Rs352.3 billion so far in FY-16 as compared to Rs222.3 billion in the same period of FY-15, the latest statistics by Stat Bank of Pakistan (SBP) showed.

"A significant part of this credit was availed by the private sector businesses. There was a high credit off-take in December 2015 which was enough to compensate for the lower cumulative flow during the earlier months of FY-16," the SBP said. The demand for the private sector credit was high due to lower cost of credit and better market conditions. The cost of borrowing declined to six per cent - an all time low in last 12 years - as a result of SBP's easy money policy.

At the same time, there was a "high deposit growth, and a lower government budgetary borrowing," which created a surplus with the banks that was lent to the private sector. "The improvement in credit to the private sector over the previous year, primarily, was due to larger borrowing by the manufacturing sector, followed by commerce and trade, construction and electricity."

The SBP also reported that with the exception of ship breaking which received Rs13.4 billion credit that was lower than the sectors past borrowing, the improvement in larger credits to other sector was broad-based. While credit for working capital and fixed investment categories, showed higher growth. But credit for trade financing was lower. One of the reasons for larger lending to the private sector was that government borrowing to cover its big budgetary deficit was lower than last year. In fact, government was funding its requirements by launching its longer - term investment bonds, rather than short-term and more expensive borrowing from the commercial banks which also had squeezed the bank credit for the private sector.

That covers the broad spectrum of the commercial lending. Does it also indicate in which direction is the economy moving?

Another key factor for a potentially good omen for the economy to grow faster is expansion of the large-scale manufacturing (LSM) sector. Its output growth rose 4.35 per cent year-on-year in the first eight months July-February of FY-16. In February, 2016 alone the LSM sector growth was 2.83 per cent higher as compared to the like month of FY-15, according to the SBP report. The key sub-sectors which contributed to the LSM growth in the first eight months of FY-16 were: automobiles 27.67 per cent, fertiliser 16.95 per cent, chemicals 11.26 per cent, leather products 11.51 per cent, rubber products 11.64 per cent, and non-metallic mineral products 8.61 per cent.

In the same period, iron and steel sector produced 19.76 per cent more billets and ingots. The capacity of the sector also expanded in this period in order to feed lager exports. The automobiles sector expanded as production of trucks rose 44.23 per cent, buses 77.54 per cent, cars and jeeps 37.10 per cent, light commercial vehicles (LCVs) 104.45 per cent, and motorcycles was up 17.1 per cent. However, tractor production was down 44.65 per cent.

In the electronics sector, production of air conditions rose 28.05 per cent, switch gear by 28.14 per cent, electric transformers 1.8 per cent, TV sets 1.74 per cent and storage batteries 2.89 per cent, besides various rises in production of other electronics.

Riaz Haq said...

#Pakistan’s Economy- Need to Accelerate #GDP Growth, Continue Structural Reforms, Increase #Exports http://goo.gl/4JvOKW via @WorldBank http://www.worldbank.org/en/news/press-release/2016/04/28/pakistans-economy-need-to-accelerate-growth#


Pakistan continues its modest growth recovery. Growth rate in 2017 is expected to rise to 4.8 percent the World Bank says.

Releasing its twice-a-year Pakistan Development Update, the World Bank applauds the government for restoring economic stability but noted that much of the country’s economic growth was underpinned by external influences such as low oil prices and strong remittances while private and public investments continue to remain low.

“Pakistan has made great progress in restoring macroeconomic stability but much more needs to be done to put Pakistan on a solid, economic growth footing,” said Illango Patchamuthu, World Bank Country Director for Pakistan. “Persistent, steady progress on the structural reform agenda will be necessary if Pakistan is to accelerate its growth recovery and lift millions more out of poverty.”

The latest Pakistan Development Update sets out recent developments across the economy and identifies risks and next steps facing Pakistan’s near-term future before focusing in on a handful of key development challenges.

The report highlights that the pace of Pakistan’s economic growth will accelerate modestly through to 2019. However, significant risks remain and the country should guard against global slowdown by continuing to make key reforms, including expanding the electricity supply, boosting tax revenues, strengthening the business environment and encouraging private sector to invest.

The report identifies services and large-scale manufacturing as the key supply-side drivers of growth. Services are expected to grow over 5 percent in FY2016 while large-scale manufacturing, benefitting from low global commodity prices, is expected to grow between 4 and 4.5 percent. On the demand side, consumption is driving growth, fueled by rising remittances and a loose monetary stance.

The report is optimistic about recent progress in fiscal consolidation, highlighting a 20 percent growth in the revenues of Federal Board of Revenue for the first eight months of FY16. “Fiscal consolidation is one of the most significant reform challenges facing Pakistan today”, said Enrique Blanco Armas, World Bank Lead Economist for Pakistan. “The federal government has kept a tight rein on recurrent expenditure, while continuing to invest in Public Sector Development Program expenditure, a very positive development.”

Workers’ remittances and lower oil prices contributed most to the accumulation in foreign reserves, according to the report. Remittances of $9.7 billion in the first half of FY16 more than compensated for the trade deficit, and oil prices delivered a 9.1 percent fall in the import bill.

The strong balance of payments headline figures, however, mask the structural weaknesses in Pakistan’s export competitiveness. Exports fell by 11.1 percent in the first half of FY16 as a result of softer global demand and domestic bottlenecks. Port charges in Karachi, for example, are nine times higher than those in Dubai and Singapore. Shipping container dwelling times are three times longer than in East Asia. Exporters who want to participate in global supply chains are hamstrung by these constraints.

Riaz Haq said...

#Pakistan #agriculture component of #GDP to be flat this fiscal year 2015-16 due to #drought, crop losses http://www.world-grain.com/news/news%20home/LexisNexisArticle.aspx?articleid=2577597560 …

Pakistans neglected agriculture sector is all set to face a major blow as the farm sector growth is expected to touch zero in the current fiscal year mainly because of negative growth in major crops including cotton, rice and sugarcane as well as dwindling commodity prices in international market, a senior economist said on Tuesday.

The agriculture growth might touch zero in the current fiscal year mainly because of negative growth of major crops like cotton, rice and sugarcane and poor performance of minor crops, said Dr Hafeez A Pasha, former finance minister, when contacted for his comments. The livestock might not be able to compensate overall farm growth up to the desired mark during the outgoing financial year.

Dr Pasha said whenever the countrys agriculture sector witnessed a dip; its overall gross domestic product (GDP) growth rate never crossed 4 percent in any year mainly because the countrys overall economy was largely dependent upon agriculture in terms of trade, commerce and agri-based exports.

Sources, however, said in the wake of expected flat growth of agriculture sector, which will remain in the range of just 0.3 to 0.5 percent, Pakistans prospects for achieving overall GDP growth rate have also plunged into danger zone as the growth rate will be hovering around 4.5 to 4.7 percent maximum for outgoing fiscal year against desired envisaged target of 5.5 percent in 2015-16.

When contacted a top official of the Pakistan Bureau of Statistics (PBS), he said the National Accounts Committee (NAC) was expected to meet by mid of next month. The PBS is not responsible to collect primary agriculture data as NACs agriculture committee will provide data to the PBS on the basis of which the farm sector growth will be estimated on provisional basis.

As the PBS did not see the data so far so it would be premature to give any judgment on this issue, the official said. But he added that the wheat crop might produce positive results mainly because of its output achieved in Barani areas of the country.

Many independent economists believe that the countrys agriculture sector might witness a negative growth in the current fiscal year but some economic managers claimed that the farm growth might slide into positive side by demonstrating nominal growth just around 0.5 percent. However it would be definitely missed out the fixed target of 3.9 percent for the current financial year.

For finalizing the Budget Strategy Paper (BSP) for next three years, Finance Ministry refused to bring down its envisaged GDP growth rate target of 5.5 percent for the current fiscal year despite insistence of Planning Commission to cut it to around 5 percent.

Ministry of Finance still appeared confident that the manufacturing and services sector could play major role to jack up overall GDP growth rate over 5 percent as they claimed that the sale of cement is increasing.

Overall, the agriculture sector grew by 2.9 percent in last fiscal year of 2014-15, which was lower than the envisaged target growth of 3.3 percent but higher than the growth of 2.7 per cent achieved during the fiscal year 2013-14.

The agriculture sector is targeted to grow by 3.9 percent this year on the basis of expected contributions of important crops (3.2 percent), other crops (4.5 percent), cotton (5 percent), livestock (4.1 percent), fishing (three percent) and forestry (four percent). 2016 Global Data Point.

Riaz Haq said...

#Drought hits top rice exporters #India, #Thailand, #Vietnam, #Pakistan, #US 19 m tons now down fm 41 m tons in 2013 http://www.reuters.com/article/us-rice-asia-drought-idUSKCN0X90BT

Crippling drought brought on by the El Nino weather pattern could cut rice stocks among the world's top exporters to levels not seen since 2008, potentially fuelling a price crisis similar to one seen that year, an industry expert warned.

Total stocks in top shippers of the grain India, Thailand, Vietnam, Pakistan and the United States are likely to fall to 19 million tonnes by the second half of the year, from a peak of nearly 41 million tonnes in 2013, said Samarendu Mohanty, head of the social sciences division at the Philippines-based International Rice Research Institute.

"If we have a bad monsoon, with drought still persisting in many parts of Asia, the risk significantly increases in terms of price response," Mohanty told Reuters in a telephone interview. Dwindling stockpiles could crimp volumes exporters are willing to ship abroad.

Although a severe El Nino is now fading, it has brought drought to swathes of Asia, drying irrigation channels and destroying crops. It has also stoked concerns on the strength of the South Asian monsoon due to start around June.

Export restrictions by major rice producers including India fed panic in the market in 2008, forcing big purchases by countries such as the Philippines that caused Asian benchmark prices to nearly triple to around $1,000 a tonne.

After that, consumers and exporters, mainly in Asia, rebuilt rice inventories to avoid another crisis, but Mohanty said stocks have been declining since 2013.

"Last year, nobody was panicking because they were sure that there's plenty of rice in the market if there's any shortfall. I think we don't have that luxury anymore this year," he said.

The price of Thai 5-percent broken rice touched an eight-month high of $378.50 a tonne in March, while Vietnam's own 5-percent broken rice last month rose to a 2-1/2-month peak of $385 a tonne.

Mohanty said India and Thailand, the world's top two exporters, would have combined stocks of around 16 million tonnes by the third quarter, around 70-percent lower than levels in 2013.

That buffer will be much smaller than recent stock levels of 16.2 million tonnes for India and about 12 million tonnes for Thailand.

India will be "very cautious in exporting" if its rice output is hit by a weak monsoon, said Mohanty.

That could push big buyers such as the Philippines and Indonesia to accumulate the grain, a staple food for nearly half of the world's population, similar to what happened in 2008.

"We might see the same thing as we move forward and countries get scared about the weather situation around them," Mohanty said.

The Philippines is considering importing another 500,000 tonnes of rice this year to boost state reserve stocks.

Riaz Haq said...

Nearly a million workers left #Pakistan for overseas jobs in 2015

http://tribune.com.pk/story/1098127/nearly-a-million-workers-left-pakistan-in-2015/

Around a million Pakistanis left the country for better work opportunities in 2015 alone, a Senate panel was told on Thursday.

Senate Committee on Overseas Pakistanis and Human Resource Development was informed on Thursday that since 1971, over 9 million Pakistanis have emigrated through the Bureau of Emigration and Overseas Employment.

Fewer jobs for Pakistanis in Middle East

This number peaked in 2015 when 946,571Pakistanis moved to other countries. Since 2013, over 2.32m Pakistanis have left the country for work. Among these six per cent proceeded to Gulf Cooperation Council countries, about one per cent moved to the European Union and other developed countries, three per cent to Malaysia, Libya, South Korea etc.

Giving details, Federal Secretary for Overseas Pakistanis and Human Resource Development Khizar Hayat Khan pointed out how Khyber-Pakhtunkhwa made up just 12 per cent of Pakistan’s entire population at home, but it comprises 26 per cent of Pakistanis working abroad.

Similarly, as many as 0.5 million people hailing from the Federally Administered Tribal Areas (Fata) are working abroad. He added that these people remit large sums of money home but facilities in their native areas does not reflect this.

Female participation in workforce makes sense – at all levels

He admitted that while there was a culture of corruption in the system, the only way to do away with it was to computerise the system of applications.

Senator Lt General (retd) Abdul Qayyum pointed towards the rampant corruption in recruiting protectors, calling for their background checks and rigorous training and grooming.

The panel called for setting up additional offices of Protectorates of Emigrants after Overseas Pakistanis Foundation Director General Rana Matloob informed them that there were just seven protectorate offices in the country.

Riaz Haq said...

Pakistan’s economy has come a long way since it started a structural reforms programme three years ago, bringing back stability and discipline to the economy while restoring confidence in the financial system, State Bank of Pakistan (SBP) Governor Ashraf Wathra told Gulf News in an exclusive interview.

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The overall inflation remained contained to less than 3 per cent during the period July to April in the current financial year as compared to 8.62 per cent in 2014 and 4.53 per cent in 2015. “Our year on year inflation for the current fiscal year ending in June will be 3 per cent. We believe that is a good number considering our original target of 6.5 per cent,” said Wathra.

The country’s foreign exchange reserves are close to $21 billion (Dh77 billion) as of May 9, 2016 of which SBP reserves stood at $16.125 billion and that of scheduled banks at $4.802 billion.


According to a recent World Bank report, workers’ remittances and lower oil prices contributed most to the accumulation in foreign reserves. Remittances of $9.7 billion in the first half of fiscal year 2016 more than compensated for the trade deficit, and oil prices delivered a 9.1 per cent fall in the import bill.

The current lending rate of commercial banks is at about 6 per cent, the lowest in 12 years, in a country where the businesses have borne the brunt of the rate even as high as 18 per cent. Analysts say, in the context of low inflation, the Independent Monetary Policy Committee that sets the interest rates has enough elbow room to keep the rates at the current low or event take it lower.

According to Wathra, the aggregate loan growth numbers of the banking sector are very encouraging at the current lending rates. “With a low inflation that is below our target and considering the fact that an emerging economy like Pakistan can accommodate a slightly higher inflation rate, the lending rates could remain low. But it is not inflation alone, rather the overall economic data that will be considered by the Monetary Policy Committee in making adjustments to the lending rates,” he said.

In the current and the previous quarters, the overall banking sector credit growth surged in excess of Rs300 billion (Dh10.5 billion) with most of that accounting for long term credit. “Clearly the private sector’s long term credit offtake is picking up momentum, indicating growing demand for industrial credit that leads to higher economic growth prospects,” said Wathra.

Pakistan’s Ministry of Finance expects the country’s GDP to grow in excess of 6 per cent in the next financial year, starting this July. While the country achieved 4.2 per cent growth in 2015, it is expected to be 5 per cent this year.

http://gulfnews.com/business/sectors/banking/improved-fundamentals-restore-confidence-in-pakistan-s-financial-system-1.1827912

Riaz Haq said...

Most people choose not to migrate in spite of poverty and oppression as obvious from lowest rates of migration out of sub-Saharan Africa.

Results show that despite increase in the absolute number of migrants, Africa, particularly SubSaharan Africa has one of the lowest rate of emigration in the world and a majority of them migrate to other African countries signifying the importance of south-south migration. Poorer countries generally have lower rate of emigration and higher rate of intra-African migrant. Bad socio-economic conditions generally seem to lead to higher rate of emigration by highly skilled individuals. Generally, migration is driven by motives to
improve livelihoods with notable evidence on changes in labor market status. Often, self-employed or unemployed émigré ended up in wage employment. The paper outlines policy issues emerging from the migration trend in Africa.


http://www.afdb.org/fileadmin/uploads/afdb/Documents/Procurement/Project-related-Procurement/WORKING%20119%20word%20document%20AA.PDF

t is often said that the only way to reduce migration from poor countries is to boost development, but this ignores the inconvenient fact that development is generally not associated with lower levels of emigration. Important emigration countries such as Mexico, Morocco, Turkey and the Philippines are typically not among the poorest countries. Meanwhile – and against popular perceptions of a “continent on the move” – Sub-Saharan Africa is the least migratory region of the world.

Development drives migration

In fact, when you examine the data, human and economic development is initially associated with increasing emigration. Any form of development in the poorest countries of the world is therefore likely to lead to accelerating emigration. Such findings contradict conventional thinking and force us to radically change our views on migration. Such rethinking can be achieved by learning to see migration as an intrinsic part of broader development processes rather than as a problem to be solved, or the temporary response to development “disequilibria”.

http://theconversation.com/explainer-what-makes-people-migrate-21442