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Pakistan’s current account deficit shrinks by 45% to $1.2bn

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2 years ago

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  • Decline in current account deficit largely reflects a sharp decline in energy imports.
  • “Narrower deficit is the result of wide-ranging measures taken in recent months,” SBP notes.
  • Primary reason behind yearly deficit is a decline in remittances.

KARACHI: The three-month import ban imposed by the coalition government bore fruits as Pakistan’s current account deficit — the gap between the country’s higher foreign expenditure and low income — shrank by a massive 45% month-on-month.

The current account deficit clocked in at $1.21 billion in July 2022 in comparison to a deficit of $2.2 billion (revised figure) in June, data released by the State Bank of Pakistan (SBP) showed.

“The current account deficit shrank to $1.2 billion in Jul from $2.2 billion in June, largely reflecting a sharp decline in energy imports and a continued moderation in other imports,” the central bank said in a brief note released on its Twitter handle.

“The narrower deficit is the result of wide-ranging measures taken in recent months to moderate growth and contain imports, including tight monetary policy, fiscal consolidation and some temporary administrative measures.”

On a year-on-year basis, the primary reason behind the deficit was an 8% (yearly) decline in remittances along with a 0.4% (year-on-year) increase in total imports to $6.2 billion.

However, total exports increased by 4% year-on-year during July. Data showed that imports of goods stood at $5.39 billion in July, compared to $7.03 billion in June. At the same time, imports of services stood at $790 million in July compared to $1.32 billion in June.

Previously, widening the current account balance being an important indicator of Pakistan’s economy led to an outflow of US dollars, which had put additional pressure on the currency that has continued to struggle against the greenback.

SBP, PBS trade figures reveal discrepancies

However, the SBP and Pakistan Bureau of Statistics (PBS) trade figures revealed discrepancies. The data available showed that SBP imports exceed PBS imports in the first month of the fiscal year (July) — “a seldom event seen historically”.

According to the data released by the central bank, the total imports of the petroleum group clocked in at $2.4 billion while the figures of the bureau highlight the amount of $1.4 billion — reflecting a difference of $984 million.

Similarly, for the textile group, SBP data showed that the imports were around $379 million while PBS said that the imports clocked in at $309 million — which calculates to a difference of $70 million.

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In interbank trade, the Pakistani rupee beats the US dollar.

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5 days ago

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In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

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Phase II of CPEC: China-Pakistan Partnership Enters a New Era

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6 days ago

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The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.

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The inflation rate in Pakistan dropped to its lowest level.

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6 days ago

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On December 2, core inflation as determined by the Consumer Price Index (CPI) significantly slowed, falling to 4.9% in November 2024 from 7.2 percent in October 2024.

The CPI-based inflation rate for the same month last year (November 2023) was 29.2%, according to PBS data.

Compared to a 1.2% gain in the prior month, it increased by 0.5% month over month in November 2024.

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