Current account posts $98m deficit in August

September 16, 2026 (MLN): Pakistan's current account deficit narrowed sharply to $98 million in August, its smallest monthly shortfall since April, as a fresh wave of remittance inflows offset a stubbornly wide trade gap, according to Balance of Payments data released by the State Bank of Pakistan (SBP) and reviewed by Mettis Global.

The August print marks a 78% contraction from July's $445 million deficit and a 70% narrowing from the $324 million gap recorded in August last year.

Yet the improvement owes more to a favourable trade timing effect and resilient remittance flows than to any structural correction in the goods account, which continues to widen on a year-on-year basis.

Two Months Into FY27, the Deficit Is Narrower, the Trade Gap Isn't

Cumulatively, the current account deficit for the first two months of FY27 (July–August) stands at $543 million, 36.3% narrower than the $853 million shortfall over the same period last fiscal year.

The improvement is almost entirely a remittance story: inflows over July–August rose 14.7% YoY to $7.29 billion.

The trade balance in goods and services, by contrast, has widened 13.2% YoY to a $6.75 billion deficit, underscoring that import demand plausibly tied to a recovering domestic activity and energy costs  is running ahead of export growth this early in the fiscal year.

Imports Retreat, But the Gap With Exports Keeps Growing

Goods imports fell 10.8% month-on-month to $5.49 billion in August from July's $6.15 billion, and exports contracted even faster, down 17.6% to $2.46 billion. The net effect was a modest narrowing of the goods trade deficit to $3.03 billion from $3.16 billion in July.

The year-on-year comparison tells a less comfortable story. Against August 2025, imports are up 9.3% while exports are down 1.1%, pushing the goods trade deficit 19.5% wider than a year ago.

Combined with services, the overall trade shortfall stood at $3.31 billion for the month, an 11.1% year-on-year increase  a gap that has now widened in nine of the past twelve months, a pattern worth watching as import demand firms up even as export competitiveness lags.

Remittances Do the Heavy Lifting

Workers' remittances came in at $3.66 billion for August, up 16.5% from $3.14 billion a year earlier, and marginally higher than July's $3.63 billion. Inflows have now stayed above $3.4 billion in eleven of the last thirteen months, with the May 2026 spike to $4.25 billion  likely tied to Eid-linked transfers  still the high-water mark of the run.

Secondary income overall, dominated by remittances, rose to $3.89 billion for the month, comfortably offsetting the $672 million primary income outflow tied to profit repatriation and debt servicing.

Reserves Hold Steady After June's Surge

SBP's gross foreign exchange reserves stood at $18.48 billion at the end of August, up marginally from $18.34 billion in July and 18.1% higher than the $15.66 billion held a year ago.

That YoY buffer-building has been the more consistent story of FY26 into FY27, even as the reserve stock has pulled back from June's peak of $19.69 billion.

August's overall balance of payments position  the sum of the current, capital and financial accounts  slipped into a $118 million deficit, a reversal from July's $1.39 billion surplus, driven largely by financial account outflows tied to other-investment repayments rather than reserve drawdown pressure.

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