Pakistan posts $424 Million Current Account Surplus in July

August 24, 2020 (MLN): Pakistan’s current account balance has swung into a surplus of $424 million in July 2020. This surplus during the month is emanated from higher workers remittances and recovery in exports on sequential basis.  

Compared to the previous month i.e. June 2020, current account posted a deficit of $100 million.

This is the fourth monthly surplus since last October, and a significant improvement on the deficit of $613 million in the same month last year.

As per SBP, the strong turnaround is mainly due to a continued recovery in exports and record-high remittances with support from several policy and administrative initiatives by SBP and government. Moreover, exports sustained strong recovery, with MoM growth of further 19.7% in July'20 on top of 25.5% in June'20.

According to the latest data issued by SBP, the Exports of Goods during the month improved by $311 million, up by 20% MoM due to lifting off lockdown in major countries. However, Imports of Goods also increased by $70 million, up by 2% MoM, resulting in a 12% MoM improvement in Trade deficit primarily owing to increase in textile exports and lower machinery imports.

The trade deficit of Goods on yearly basis also improved by 12% as imports declined by 13% YoY and exports also went down by 15%.

Trade balance in services, while still negative, also improved by 14% YoY to $362 million courtesy of a 9% YoY reduction in imports though the exports also decreased by 5% YoY. While on monthly basis, the trade deficit in services increased by 62% compared to $224 million in June’20 as imports of services jumped by 29% MoM and exports by 11% MoM.

Worker remittances during July’20 hit an all-time high of $2.768 billion, up by 36% YoY from $2 billion in July 2019 as flights absence caused disruption in underground banking, forcing Non-Resident Pakistanis (NRP) to transfer Eid festivity funds through proper channels. Resultantly, the buffer to trade and services gap was more than adequate during the month, a report by Fortune Securities mentioned. Whereas, compared to the month of June’20, worker remittances stood at $2.46 billion, showing a growth of 12% MoM.

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