Pakistan’s Current Account Deficit Widens To Above $11.5 Billion In Seven Months Of 2021-22
Sharp increase in the current account deficit in January-2022 negates the government and the SBP forecasts of reduction in CAD from Jan-June 2022.
ISLAMABAD ( Web News )
The current account deficit of Pakistan has widened to beyond $11 billion in first seven months of the ongoing fiscal year. During July 2021 to January 2022, the current account deficit of Pakistan has expanded to $11.58 billion in comparison with $1.05 billion surplus current account balance in the corresponding period of the preceding fiscal year.
In the month of January 2022, Pakistan’s current account deficit (CAD) rose to $2.6 billion, from $1.9bn in December 2021, largely due to imports in kind that are fully financed.
The State Bank of Pakistan today said that excluding these, the deficit would have been around $1bn lower in January 2022. While the current account balance rang alarming bells as the deficit widened massively.
The country recorded CAD of $11.58bn in the first seven months of the ongoing fiscal year as opposed to $1.03 bn surplus recorded in the same period last year, reflecting the robust increase in imports.
The trade deficit in goods inched up by around 8.5% MoM to $3.93bn in January 2022 as exports of goods dropped by nearly 15% MoM while imports saw a marginal decrease of 2% MoM. On year on year, the trade deficit in goods widened by 45% in the said month.
Meanwhile, the trade balance in services, while still negative, surged by 24% MoM to $406mn courtesy of a 24% fall in exports while imports edged lower by 8.3% during the period under review.
On year-on-year, the trade deficit in services went up by 3x YoY in January 2022. Workers’ remittances declined by 15% MoM to $2.14bn from $2.5bn in December 2021.
On a cumulative basis during July-Jan FY22, remittances by overseas Pakistani moved up by 9% YoY to $17.95bn from $16.46bn recorded in July-Jan FY21.