September 17, 2021 (MLN): Pakistan’s current account balance (CAB) posted a deficit of $1.47billion in August 2021, compared to a surplus of $225million in the corresponding month last year.
In the previous month, CAB posted a deficit of $814mn, suggesting that the deficit jumped notably by 81% MoM mainly attributable to an increase in imports. Meanwhile, despite increase in current account deficit (CAD), SBP’s foreign reserves position continued to strengthen as it rose to an all-time high of $20bn.
According to SBP, the recent rise in the current account deficit reflects both the strong domestic recovery and higher international commodity prices.
Mohammed Sohail, a broker at PSX said that this $1.47bn deficit is dangerous but was expected after record imports in August. Not only global prices are increasing, but demand is also rising in Pakistan, which requires urgent Fiscal and Monetary steps to control, he added.
Cumulatively, during 2MFY21, Pakistan's current account balance stood at a deficit of $2.29bn against a surplus of around $838mn in the corresponding period last year.
According to the data issued by SBP, during the month of August’21, total imports of goods and services increased by 86% YoY to $6.89bn compared to $3.7bn in Aug’20. Similarly, on monthly basis, total imports swelled by 12% MoM from $6.14bn in Jul’21.
Total Exports during the month jumped by 55% YoY to $2.88bn compared with $1.86bn logged in the same month the previous year. Whereas, on a monthly basis, total exports witnessed a slight jump of 6% in Aug’21 as it was $2.73bn in the previous month.
This resulted in a trade deficit of $4bn in Aug’21, up by 117%YoY and 18% MoM.
Workers' Remittances by overseas Pakistani registered a growth of 27% YoY while declined slightly by 2% MoM to $2.66bn during Aug’21, compared to $2.1bn in the same month a year ago and $2.7bn in Jul’21.
On a cumulative basis during Jul-Aug FY22, remittances by overseas Pakistani moved up by 10% YoY to $5.36bn from $4.86bn recorded in Jul-Aug FY21.
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