"Generally, weaker remittances will immediately impact the recipient countries' credit profiles via their balance of payment positions. A prolonged fall would also hurt economic
growth, given the importance of remittances to household incomes," it said in a report.

Moody's in a report titled 'Sovereigns –  Asia Pacific: Falling Remittances from the Gulf Dampen Benefits of Lower Oil Prices' analyzes the potential credit implications of weaker
remittances from their citizens working abroad for six Asian countries –  Bangladesh, India, Pakistan, the Philippines, Sri Lanka and Vietnam.

For these six economies, remittances are equivalent to 3 to 10 percent of GDP, and between 22 and 188 percent of foreign reserves.

India gets 52.1 percent of its remittances from the Gulf nations while the exposure of Pakistan to the region is the highest at 61.2 per cent of remittances. Bangladesh gets 54.8
per cent of its remittances from Gulf while Sri Lanka gets 50.9 percent.

Moody's said the 25 percent drop in oil prices since the start of 2015 is large, and it expected that future declines in remittances will be much lower than that in percentage

"So, unless remittances decrease significantly more in percentage terms than we anticipate, their decline will dampen, but not completely offset, the benefits of lower oil prices on the current account," it said.

While the beneficial effects of a lower oil bill on current accounts have already fed through, most of the negative impact from remittance inflows may be yet to come, it said.

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