Pakistan's current account deficit shrinks to lowest in 13 years

July 19, 2024 (MLN): Pakistan’s current account recorded its smallest deficit in more than a decade amid robust growth in remittances and exports, which more than offset the uptick in imports.

The gap in current account, the broadest measure of trade and investment, shrank to $681 million, or 0.2% of gross domestic product in FY24, according to data released by the State Bank of Pakistan on Friday.

That compares with a deficit of $3.27 billion in the previous year and an average gap of $8.3bn in the past five years. It was the smallest deficit since FY 2011.

In June alone, the current account deficit stood at $329m. That compares with a deficit of $248m in the previous month and a surplus of $490m in June 2023.

Robust exports of food and high value-added (HVA) textiles, along with subdued import payments due to improved domestic agricultural output, moderate domestic demand, and supportive global commodity prices, significantly narrowed the trade deficit.

During FY24, the trade deficit was recorded at $24.39bn, a fall of 5.7% when compared to the deficit of $25.86bn in FY23.

Exports rose 9.7% to $38.9bn compared to $35.47bn last year.

While imports rose 3.2% to $63.29bn in FY24 compared to $61.33bn last year.

Furthermore, workers’ remittances remained strong, supported by incentives and regulatory reforms aimed at channeling inflows through formal channels.

Workers' remittances were recorded at $30.25bn as compared to $27.33bn a year earlier, depicting a rise of 10.7%.

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