Why Saudi Arabia matters more than ever
Saudi Arabia led December inflows and is central to the next phase. New defence–economic cooperation and 500+ pledged jobs point to sustained corridor strength. Short-term, that’s supportive for reserves and FX liquidity. Medium-term, it reinforces a model where labour exports substitute for goods exports.
The upside (why markets cheer)
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Currency stability: FX inflows smooth volatility.
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Reserve cover: Improves import financing and debt optics.
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Household resilience: Rural incomes (KP, Punjab) see material support.
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Counter-cyclical buffer: Remittances often rise when domestic growth falters.
The risk (why economists worry)
Remittances can plug the current-account gap, but they can also delay hard reforms:
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Trade policy inertia: High tariffs and para-tariffs protect inefficient sectors.
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Export concentration: Low value-added goods dominate; diversification stalls.
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Manufacturing stagnation: Imports rose ~8% YoY while output lagged—masking competitiveness gaps.
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Chronic imbalance: Pakistan has lived with a 5–7% of GDP trade gap for much of the past decade.
Bottom line: Remittances stabilize the present but can postpone the future if treated as a substitute for export competitiveness.
