In a notable shift from the previous month’s surplus, Pakistan has recorded a current account deficit of $269 million, according to the latest figures released by the State Bank of Pakistan (SBP). This development is attributed primarily to a decrease in exports combined with a rise in imports, reflecting broader economic challenges.
EXPORTS AND IMPORTS: A DETAILED LOOK
The country witnessed a 4.40% month-on-month (MoM) decrease in total exports, which fell to $3.37 billion from $3.53 billion. Despite this monthly downturn, exports have shown a robust year-on-year (YoY) increase of 15.84%, climbing from $2.91 billion in the same period last year. On the other side of the trade ledger, imports surged by 11.01% MoM and 21.33% YoY to $5.51 billion, up from $4.96 billion in December and $4.54 billion in January of the previous year.
PAKISTAN RUPEE TAKES A POSITIVE TURN: A DETAILED ANALYSIS OF REER AND NEER IN JANUARY 2023
A CLOSER LOOK AT THE CURRENT ACCOUNT
The fluctuation in Pakistan’s current account, from a surplus of $404 million last month to a deficit, underlines the volatile nature of global trade dynamics impacting the country. Comparing year-on-year figures, the current account deficit in January 2023 stood at $167 million, showing a significant increase to the current period.
CUMULATIVE INSIGHTS AND REMITTANCES
The cumulative current account deficit for the first seven months of the fiscal year 2024 (7MFY24) was recorded at $1.09 billion, showing a substantial year-on-year improvement of 71.21% compared to the $3.8 billion deficit in 7MFY23. This improvement signals a positive trend in managing the external sector despite monthly fluctuations.
In terms of workers’ remittances, there was a slight month-on-month increase of 0.63% in January, reaching $2.4 billion from $2.38 billion. Year-on-year, remittances saw a significant jump of 26.16%, from $1.9 billion in January of the previous year. However, the cumulative figure for workers’ remittances in 7MFY24 fell by 2.97% to $15.83 billion from $16.32 billion in 7MFY23, indicating challenges in sustaining the flow of remittances.
CONCLUSION: ECONOMIC RESILIENCE AMID CHALLENGES
The data presents a mixed picture of Pakistan’s economic health, with signs of resilience in the face of global economic pressures and domestic challenges. While the current account deficit highlights the immediate need to bolster exports and manage import growth, the year-on-year improvement in the cumulative deficit and the significant increase in remittances underscore the economy’s underlying strengths. Policymakers and stakeholders are tasked with navigating these complex dynamics to ensure sustainable economic growth and stability.
