Overseas Pakistanis sent home $3.6 billion in July, a 13 per cent jump from the same month last year, signalling that the government's ambitious $44bn remittance target for FY27 is within reach. The latest figures from the State Bank of Pakistan (SBP) show inflows remain resilient despite a prolonged Middle East conflict, with month-on-month growth of 4.5 per cent. Main Developments July's inflows compare favourably with $3.2bn received in the same month of the previous fiscal year, according to data released by the central bank on Monday. The growth aligns with the government's expectations for the first month of the current fiscal year, with the FY27 target set at $44bn, up from $41.5bn in FY26. Despite more than five months of war in the Middle East, remittances from the region did not decline; they actually increased year-on-year. Reports of Pakistanis leaving the UAE did not materialise into reduced inflows, with remittances from the Emirates remaining intact and even growing during FY26. Read also: Punjab farmers demand CM's exit, plan Rawalpindi march Currency experts attribute the resilience to thousands of Pakistanis migrating to the Middle East for jobs, particularly to Saudi Arabia. They believe the government is likely to meet its FY27 target, given the sustained demand for Pakistani labour in the region. The major corridors in July were led by Saudi Arabia ($913.9m), followed by the UAE ($737.3m), the UK ($555.5m), EU countries ($452m), and the US ($317.2m). These figures underscore the continued reliance on Gulf economies for worker remittances. Background Remittances have now left export proceeds far behind as a source of foreign exchange, helping the SBP bolster its reserves. However, the central bank's reserve position remains heavily dependent on deposits from Saudi Arabia and China, which together account for more than 50 per cent of total reserves. Despite the record inflows during FY26, Pakistan's current account stayed negative, with a trade deficit exceeding $39bn consuming most of the remittance earnings. The current year has started with a $3.5bn trade deficit, alarming stakeholders who argue that a cheaper dollar encourages higher imports and an unmanageable external imbalance. Why It Matters Achieving the $44bn remittance target is critical for Pakistan's external financing needs, as the country seeks to stabilise its economy amid persistent trade deficits. The continued strength of Gulf remittances provides a buffer, but it also masks structural weaknesses in export competitiveness and a widening trade gap. The trade deficit with China, now Pakistan's largest trading partner, remains heavily in Beijing's favour. Under-invoicing and smuggling from China are reportedly rampant, flooding the Pakistani market with Chinese products and further straining the trade balance. What's Next With July's inflows setting a positive tone, the SBP will watch whether the momentum holds through the fiscal year, especially as Middle East tensions persist. The government's ability to meet its FY27 target will depend on sustained labour migration to Saudi Arabia and other Gulf states, as well as on managing the trade deficit that threatens to erode remittance gains. Stakeholders are likely to press for measures to curb under-invoicing and boost exports, particularly to China, to reduce the structural imbalance. The central bank's regular dollar purchases in the interbank market may continue, but reserve composition, still reliant on bilateral deposits, remains a point of vulnerability.