Pakistan’s fragile economic stabilisation faces fresh risks as escalating tensions in the Middle East threaten two critical lifelines: overseas employment and workers’ remittances.
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For decades, Gulf countries have absorbed millions of Pakistani workers, easing domestic unemployment while generating vital foreign exchange. Each year, approximately 600,000 to 700,000 Pakistanis travel to the region for work, with remittances forming a key pillar of the country’s economic stability.
A recent study by the Pakistan Institute of Development Economics (PIDE) warns that a prolonged regional conflict could disrupt this system, potentially triggering large-scale return migration and a sharp decline in remittance inflows.
Between 2011 and 2025, more than 9 million Pakistani workers migrated to the Middle East, primarily to Saudi Arabia and the United Arab Emirates. In 2025 alone, around 54% of Pakistan’s total remittances originated from the region, supporting household consumption, education, healthcare, and housing.
Analysts estimate that if tensions persist, up to 500,000 workers may be unable to leave Pakistan this year, while another 500,000 could return, potentially reducing remittance inflows by $1 billion to $4 billion.
Such a disruption would significantly strain Pakistan’s labour market, which already faces pressure from a rapidly growing workforce. Nearly 2 million young people enter the labour market annually, while job creation remains insufficient. Overseas employment has historically absorbed a substantial portion of this surplus labour.
A decline in migration would not only increase unemployment but also weaken Pakistan’s external account, as remittances play a key role in managing trade deficits and supporting foreign exchange reserves.
The study highlights that geopolitical instability — including the ongoing tensions involving Iran and the United States — could undermine the Middle East’s status as a stable hub for investment and expatriate labour, particularly in cities like Dubai and Doha.
Experts stress the need for Pakistan to diversify its labour export markets, identifying opportunities in countries such as Japan, South Korea, Malaysia, and parts of Europe. At the same time, policymakers are urged to focus on domestic job creation, vocational training, and entrepreneurship to reduce reliance on overseas employment.
They also recommend strengthening reintegration policies for returning migrants, enabling them to contribute to economic growth through skills transfer, investment, and small business development.
The report concludes that while Gulf economies have long supported Pakistan’s labour market and external finances, overreliance on a single region exposes structural vulnerabilities. A comprehensive strategy focusing on diversification, skill development, and local job creation is essential to safeguard long-term economic stability.
