Karachi, July 19, 2024 – Pakistan’s Current Account Deficit (CAD) has dramatically narrowed by 80 percent, plummeting to $681 million in the fiscal year 2023-24, according to a report released by the State Bank of Pakistan (SBP) on Friday.
The CAD reduction from $3.275 billion in the previous fiscal year marks the most significant contraction in over a decade. Mohammad Sohail, CEO of Topline Securities Limited, highlighted that the CAD for FY24 stood at just 0.2 percent of the country’s Gross Domestic Product (GDP), the lowest figure recorded in the past 13 years.
This impressive reduction is primarily attributed to a sharp improvement in Pakistan’s trade balance. According to data from the Pakistan Bureau of Statistics (PBS), Pakistan’s exports surged by 10.54 percent in FY24, reaching $30.65 billion compared to $27.72 billion in the previous year. This robust export performance played a crucial role in reducing the trade deficit.
On the other hand, the country saw a slight decline of 0.84 percent in its import bill, which decreased to $54.73 billion in FY24 from $55.20 billion in FY23. As a result, the trade deficit for the fiscal year was recorded at $24.09 billion, reflecting a 12.32 percent reduction from the $27.47 billion deficit observed in FY23.
Remittances also played a significant role in narrowing the CAD. Pakistan received $30.25 billion in workers’ remittances during FY24, an 11 percent increase from the $27.33 billion recorded in the previous fiscal year. This boost in remittances helped offset the trade deficit and contributed to the overall reduction in the CAD.
For June 2024, Pakistan reported a CAD of $329 million, which was higher than anticipated due to a significant Balance on Primary Deficit of $1.1 billion. Mohammad Sohail noted that this higher deficit was partly due to the SBP clearing a backlog of profit and dividend repatriations, a trend observed for the second consecutive month.
Overall, the substantial reduction in the CAD underscores a positive shift in Pakistan’s economic landscape, driven by improved export performance and increased remittances. As the country moves forward, these developments are expected to contribute positively to economic stability and growth.
