Karachi – Pakistan’s economic landscape shows promising signs as the country’s Current Account Deficit (CAD) has seen a substantial reduction by 74 percent, dwindling to $999 million during the initial eight months (July – February) of fiscal year 2023-24, according to recent data unveiled by the State Bank of Pakistan (SBP) on Tuesday.
This significant decline marks a remarkable improvement from the corresponding period in the previous fiscal year, 2022-23, when the current account deficit stood at $3.85 billion. The encouraging figures have been largely attributed to a combination of factors, including a decrease in imports and an upsurge in exports.
The Pakistan Bureau of Statistics (PBS) reported a noteworthy 30 percent decrease in the trade deficit, which plummeted to $14.89 billion during the same eight-month period, compared to $21.30 billion recorded in the preceding fiscal year. The import bill experienced a substantial decline by 12 percent, totaling $35.25 billion in July – February 2023-24, as opposed to $40 billion during the equivalent timeframe of the last fiscal year.
Conversely, Pakistan’s exports showcased a commendable increase of 9 percent, reaching $20.36 billion in the initial eight months of the ongoing fiscal year, compared to $18.67 billion in the same period of the previous fiscal year. This surge in exports played a pivotal role in narrowing the current account deficit.
The steady inflow of workers’ remittances also contributed significantly to stabilizing Pakistan’s current account deficit. Despite registering a marginal decrease of 1.2 percent, the cumulative remittances during the first eight months of the fiscal year 2023-24 amounted to $18.08 billion, compared to $18.31 billion in the corresponding period of the preceding fiscal year.
However, the State Bank of Pakistan (SBP) reported a notable 13 percent Year-on-Year (YoY) growth in workers’ remittances for February 2024. Inflows reached $2.25 billion during the month, indicating a positive trajectory for Pakistan’s economy.
This boost in remittances facilitated Pakistan in achieving a current account surplus of $128 million in February 2024, a significant turnaround from the $50 million deficit recorded in the same month of the previous year.
The momentum in exports continued in February 2024, with a remarkable 18 percent surge to $2.58 billion, compared to $2.19 billion in February of the previous year. Conversely, the import bill experienced a 10 percent growth, reaching $4.33 billion in February 2024, compared to $3.94 billion in February of the previous year.
Despite the growth in imports, the nominal trade deficit in February 2024 witnessed a marginal decrease of 0.17 percent, totaling $1.74 billion, compared to $1.75 billion in the same month of the previous year.
The recent data reflects positively on Pakistan’s economic performance, indicating prudent policy measures and efforts to boost exports and manage imports efficiently. As Pakistan continues to navigate through economic challenges, the sustained improvement in the current account deficit presents an optimistic outlook for the country’s fiscal health in the foreseeable future.
