Karachi, October 19, 2023 – Pakistan has reported a substantial contraction in its current account deficit (CAD), with a remarkable 58 percent reduction during the first quarter of fiscal year 2023-24.
This positive development was disclosed in the Balance of Payment (BOP) data released by the State Bank of Pakistan (SBP) on Thursday.
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During the first quarter of the current fiscal year (July – September 2023-24), Pakistan’s current account deficit stood at $947 million, as compared to the deficit of $2.258 billion in the corresponding quarter of the previous fiscal year.
The significant reduction in the current account deficit can be attributed to a massive decline in the trade deficit. The country’s trade deficit contracted by 42 percent, amounting to $5.32 billion during the first quarter of the current fiscal year, as opposed to the deficit of $9.16 billion in the corresponding quarter of the previous fiscal year.
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This contraction in the trade deficit was primarily driven by a 25 percent reduction in the country’s import bill, which stood at $12.23 billion during the first three months of the current fiscal year. In comparison, the import bill was $16.33 billion during the same period in the previous fiscal year.
However, it’s important to note that while imports decreased significantly, exports also experienced a decline. Pakistan’s exports fell by 3.63 percent, amounting to $6.91 billion during July – September 2023-24, in contrast to $7.17 billion in the corresponding period of the previous fiscal year. Addressing this decline in exports remains a challenge for the country.
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Additionally, Pakistan witnessed a notable 20 percent decrease in foreign remittances during the first quarter of fiscal year 2023-24 (July – September). The inflow of workers’ remittances into the country dropped to $6.33 billion, compared to $7.90 billion in the corresponding quarter of the previous fiscal year.
The improved current account deficit and trade balance figures represent positive economic developments for Pakistan. The decrease in the current account deficit is a testament to the country’s efforts to manage its external finances and work towards economic stability. However, addressing the challenges related to declining exports and remittances remains a priority for the country’s economic outlook.
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