Falling exports and remittances is cause for concern as it will double the current account deficit in the current fiscal year and intensify pressure on the external position, said Asian Development Bank report
The report of Asian Development released on Asian economies said that Pakistan’s falling exports for the third consecutive year have been due to falling commodity prices and weak economies. But also hinted that some domestic issues also clip exports such energy shortages, lesser investment in the industrial sector to expand and modernize the units and currency appreciation against other major currencies at global arena hampering export competitiveness.
The rupee most of the time pegged at 104.70 to 104.80 level making the currency less competitive against other currencies in real terms.
This combined with falling remittances which dropped by 1.9 percent to 10.9 billion dollars in the six months, declined by almost 10 years also put pressure on the current account deficit as the Gulf countries cut spending on falling crude oil prices. But since last two months the crude oil price has gone up which might help recover remittance figures but it will add to import bill of the country.
However, with delayed payment under Coalition Support Fund, falling exports and slower rate of remittances the current account deficit to widen to 2.1 percent of GDP in current fiscal year. While it may widens to 2.5 percent in next fiscal year