July 27, 2022 (MLN): Pakistan’s current account deficit (CAD) was recorded at $17.4 billion in FY22, up by a whopping 6.2x YoY when compared to a deficit of $2.8bn in FY21, mainly on the back of higher import bill and muted growth in workers’ remittances, the latest data released by the State Bank of Pakistan showed.
In the month of June, CAD stood at $2.28bn surged by 39% against the deficit of $1.6bn reported in the same month last year. Meanwhile, SBP said that a surge in oil imports saw the current account deficit rise in June despite higher exports and remittances.
As per SBP, 3.3mn metric tons of oil was imported in June, 33% higher than in May. Together with higher global prices, this more than doubled the oil import bill from $1.4bn to $2.9bn. By contrast, non-oil imports ticked down.
“So far in July, oil imports are much lower and deficit is expected to resume its moderating trajectory,” SBP added.
On a sequential basis, in the month of June, current account deficit up by 59% from $1.43bn in May 2022.
According to the details made available by the central bank, exports of goods during FY22 jumped by 27% YoY to $32.4bn, while imports of goods went up by 33% to $54.27bn.
Exports of services during FY22 witnessed an increase of 17% YoY to $6.9bn, whereas imports of services inclined by 44% YoY to $12bn. This took the total trade deficit during FY22 to $44.7bn, up by 44% YoY.
In the month of June, exports grew by 25% YoY and 26% MoM to $3.1bn. Imports of goods during the month expanded by 12% YoY and 27% MoM to $7bn, taking the deficit in trade of goods to surge by 3% YoY and 27% MoM to settle at $3.9bn in June.
Meanwhile, the trade balance in services, while still negative, escalated by 148% YoY and 46% MoM to $727mn courtesy of a 58% YoY and 38% MoM increase in imports of services while the exports witnessed an increase of 12% YoY and 30% MoM to $646mn in June.
Further, it is worth noting that worker remittances, the backbone of the country’s economy, witnessed an upsurge of 6% YoY in FY22 to $32.6bn. In the month of June alone, remittances clocked in at $2.76bn, marking a growth of 2% YoY and 18% MoM. The increase in remittances helped containing monthly CAD.
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