Pakistan’s current account deficit shrinks 65% MoM, 55% YoY in Jan’21

February 23, 2021 (MLN): Pakistan’s current account deficit has reduced to US$229 million in January 2021 from US$652 million last month and US$512 million in the same month a year ago, showing an improvement of 65% MoM and 55% YoY, largely due to recovery in exports and strong remittances.

However, during 7MFY21, the current account still showed a surplus of US$912 million compared to a deficit of US$2,544 million in the corresponding period from last year.

In the month of January, the YoY improvement is attributable to a 2% YoY and 19% YoY increase in exports of goods and remittances to US$2.6 billion and US$2.274 billion respectively. While the MoM improvement was due to a 12% decline in imports of goods to US$4.437 billion from US$5 billion in the previous month.

Total Exports (goods and services), a key driver of growth declined by 9% MoM during Jan’21 to US$2.615 billion compared with US$2.880 billion logged in the previous month. However, on a yearly basis, total exports witnessed an increase of 2% in Jan’21 as it was US$ 2.563 billion in Jan’20. While the combined imports of goods and services during the month under review declined by 12% MoM to US$ 5.085 billion as opposed to US$5.78 billion reported in Dec’20. On yearly basis, overall imports of goods and services jumped by10% in Jan’21 from US$4.614 billion in the same month last year.

This resulted in a trade deficit of US$2.47 billion in Jan’21, up by 20% YoY while down by 15% MoM.

Cumulatively, during 7MFY21, total exports stood at US$17.26 billion, shrank by 3% YoY, whereas total imports showed an increase of 3% YoY to US$32.12 billion, resulting in a trade deficit of US$14.857 billion.

Workers' Remittances by overseas Pakistani registered a growth of 19% YoY and a drop of 7% MoM during January 2021 to US$2.27 billion. During 7MFY21, the continued healthy growth in inflows took the cumulative figure to a record level of US$16.47 billion, up by 24% YoY.

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