EDITORIAL: Pakistan’s external account saviour in the last couple of years has been inward home remittances, which are growing at a very decent pace. The total stood at USD 26.5 billion in 8MFY26, which is 46 percent higher than the number in the corresponding period two years ago. That has helped the current account to remain in surplus last year, even as goods exports are stagnating. Out of the total in 8MFY26, 53 percent is coming from GCC countries — 23 percent from Saudi Arabia, 21 percent from the UAE, and 10 percent from other GCC countries. The SBP is expecting remittances to reach USD 42 billion in FY26. This means a monthly average of USD 3.9 billion in the remaining four months, as compared to an average of USD 3.3 billion per month in the first eight months. Despite the high season of Ramazan and two Eids, at best the number could reach USD 41 billion. Having said that, there are concentration risks associated with our remittances, and these are growing. With the outbreak of the Iran war, the overall Gulf region is burning. A new norm is in the making. Unlike past attacks by Israel and the US in the region, which had remained confined to one particular country, it is now spreading across the region, as Iran is hitting Gulf states. Tension is mounting, and that could have widespread economic implications. GCC economies are growing fast, and the UAE has become a safe haven for investors. Good quality of life, top-notch infrastructure, and low taxes are attracting many rich people and companies. Its real estate sector has been growing at a fast pace for over a decade, while lately it has become an attraction for IT companies to establish data centres and cloud infrastructure. However, the region’s risk profile is now changing. It can no longer remain completely secure. There is a dent. Its impact can only be evaluated once the war is over. It seems that the US is interested in ending the war, as high prices and tumbling markets are Trump’s weakness. Similar are the sentiments of GCC countries, which are facing supply chain disruptions and sporadic attacks. However, both Iran and Israel have ideological motivations to continue the war. If the US and GCC countries can convince the other parties, the war may end soon and things may start improving. It may take a few months for commodity prices — especially gas and petroleum products — to normalise, while oil prices may fall immediately. In that case, there might be a dent in Pakistan’s external account, but not enough to jeopardise the hard-earned stability. The bigger issue is the medium-term prospect for home remittances. Even if the war is over, there might be more episodes in the future in which Israel attacks Iran, and the latter may not refrain from hitting other GCC countries, including the UAE. The overall development and progress of Gulf countries may suffer. The pace of expansion may slow down, and overall economic growth may weaken. Investment may continue to come into real estate. However, progress on data centres and other IT infrastructure may take a hit, as companies have already moved hosting to European regions. All this could result in fewer jobs and business opportunities in the GCC region and may impact countries that are heavily dependent on remittances. Pakistan’s reliance on remittances is the highest among countries with populations of over 100 million. Remittances are approaching 10 percent of GDP; the percentage is more than double that of India’s and 50 percent higher than Bangladesh’s. Furthermore, Pakistan’s external account vulnerabilities are higher than those of many other countries. At this point, there is no immediate crisis in the offing, but the government should be cognizant of the risk, and it needs to diversify its forex earnings. Exports should grow, and the geographical base for home remittances should expand. Meanwhile, we can only hope for peace to be restored. Copyright Business Recorder, 2026