WORKERS’ REMITTANCES
UNDER THE RADAR
Will foreign exchange inflows from abroad staff stand up to the continuing international tensions?
Shiran Fernando presents an evaluation
But, this potential stress was largely offset by a outstanding surge in staff’ remittances. In absolute phrases, remittances grew by round 1.5 billion {dollars} in 2025 to achieve US$ 8 billion for the yr – that mirrored a year-on-year improve of just about 23 %.
The month-to-month common rose sharply to 673 million {dollars} in 2025 in comparison with US$ 548 million within the earlier yr. And inflows in January 2026 reached 751 million {dollars}, reinforcing the view that the brand new regular may very well be structurally increased than within the rapid post-crisis years.
So the important thing query now could be whether or not this momentum could be sustained.
DIVERSIFICATION Sri Lanka has traditionally relied closely on the Center East for remittance inflows. In 2025, staff within the UAE, Kuwait, Saudi Arabia and Qatar collectively accounted for near 40 % of complete remittances.
Nevertheless, the composition of inflows is altering. Whereas the UAE and Kuwait remained the highest sources, remittances from international locations such because the UK and Italy additionally recorded robust development.
Inflows from the UK are partly linked to cross border overseas alternate transaction preparations with some being diverted by monetary centres. However, the shift in the direction of superior economies is obvious.
This development displays a structural change in migration patterns.
Final yr, greater than three-quarters (76%) of exits for overseas employment have been within the expert class. Larger expert staff sometimes command higher wages and remit bigger sums.
Complete departures surpassed 310,000 in 2025 with a month-to-month common of practically 26,000. Though departures confirmed solely a marginal decline in comparison with the previous yr, the standard of migration seems to have improved.
Regionally, in extra of 80 % of migrant staff nonetheless headed to the Center East, underscoring continued danger of focus. Nevertheless, inflows from non-core markets reminiscent of Australia, Israel, South Korea and elements of Europe are growing. This diversification reduces vulnerability to shocks in anyone area.
DEMOGRAPHICS This migration story additionally has a home dimension. The very best density of exits relative to inhabitants continues to come back from districts reminiscent of Batticaloa, indicating localised dependence on abroad employment.
Furthermore, nearly all of migrant staff are within the 25-34 age bracket for males whereas a notable share of feminine migrant staff are above 50. These patterns counsel each alternative and long-term labour market challenges.
Whereas remittances strengthen the exterior sector within the quick run, the longer-term influence of sustained expert migration on home sectors reminiscent of tourism, monetary companies, healthcare and manufacturing can’t be ignored.
MACROECONOMICS One other key driver of the surge has been macroeconomic stabilisation. Through the 2022 disaster, the divergence between official and casual alternate charges incentivised remittances by unofficial channels.
However as stability returned and alternate charge volatility narrowed, and moved from the sharp depreciation in 2022 to a extra predictable band round Rs. 305-310 to the US Greenback, confidence in formal banking channels improved.
A portion of remittances is now obtained by international remittance channels and apps, which aren’t at all times captured in conventional country-wise breakdowns. The digitalisation of transfers and improved compliance frameworks have seemingly helped shift flows again into the formal system.
Freelancers and distant staff may additionally be contributing to increased inflows. As international demand for digital companies expands, Sri Lankan professionals working remotely for abroad shoppers are more and more incomes in overseas foreign money and boosting remittance kind inflows with out bodily migration.
RESILIENCE Globally, remittances to low and center earnings international locations remained resilient in 2025 regardless of slower development in superior economies.
Labour shortages in ageing societies significantly in Europe and elements of East Asia have supported migrant wage development. In the meantime, Gulf economies benefitted from comparatively secure vitality revenues and a sustained demand for employment.
Nevertheless, dangers stay. Tighter immigration insurance policies in elements of Europe, geopolitical tensions within the Center East – together with the Iran battle – and a possible international financial slowdown might dampen future inflows.
Globally, remittance development is anticipated to reasonable after the post-pandemic rebound years, suggesting that Sri Lanka could not proceed to take pleasure in annual development charges of greater than 20 % indefinitely.
SUSTAINABILITY Final yr, Sri Lanka’s exterior sector was cushioned by two pillars: remittances and tourism. Collectively, they helped offset rising import demand together with car imports.
If remittances stabilise above US$ 8 billion yearly and tourism continues its restoration, the present account might stay manageable even with gradual import normalisation.
But, sustainability hinges on three elements.
Firstly, continued expert migration and better wages overseas; secondly, macroeconomic credibility at dwelling by sustaining formal channel utilization; and thirdly, international financial resilience significantly within the Center East and Europe.
Remittances have supplied essential respiration house to the financial system. The problem now could be to leverage this window by strengthening home job creation, enhancing abilities improvement, and channelling remittance financial savings into productive investments in order that long-term development doesn’t rely disproportionately on exporting labour.
