Current Account Deficit Widens To $3.4 Billion In First Quarter Of FY22

ISLAMABAD ( JAVED MAHMOOD )

The current account deficit of Pakistan in the first quarter (July-Sept 2021) period of this fiscal showed a further increase in CAD, to $3.4 billion. During the corresponding period of last fiscal year, Pakistan’s current account balance was surplus with $865 million.

During July-August period of this fiscal, the current account deficit stood at $2.2 billion compared to $865 million surplus in the same months a year ago. However, in Sept 2021, the current account deficit has slightly declined, $1.2 billion as against $1.47 billion in Aug-2021 because of different measures, which were put in place by the government to slowdown non-essential imports to avoid unwanted gap in the current account deficit.

In the month of Sept’21 alone, the country recorded a CAD of $1.11bn against the surplus of $27mn in Sept’20. While on a sequential basis, CAB witnessed an improvement in deficit, down by 24.4% MoM when compared to a deficit of $1.47bn in Aug’21 on the back of an increase in exports, Mettis Global, a Karachi-based fin-tech company, reported today quoting data of the State Bank of Pakistan (SBP).

Analysts said the deficit in Sept 2021 was below the expectation, from 1.5 billion to 1.2 billion which was a good sign and this trend, if prevailed further in FY22, it was squeeze further the current account deficit.

A strong rebound in economic activity and higher international commodity prices kept the current account deficit (CAD) at an elevated level, Central Bank said on its Twitter handle.

The trade deficit in goods narrowed by 6% MoM to $3.43bn in Sept’21 as exports of goods jumped by 12.5% MoM while imports saw a marginal increase of 1.3% MoM. However, the trade deficit in Goods has widened by 82% YoY in the said month

Meanwhile, the Trade balance in Services, while still negative, also improved by 65.2% MoM to $117mn courtesy of a 24.1% MoM reduction in imports though the exports increased marginally by 1.3% MoM.

On year-on-year, the trade deficit in services went up by 23% YoY. Worker remittances improved slightly by 0.45% MoM to $2.67bn from $2.66bn in Aug’21.

On a cumulative basis during July-Sept FY22, remittances by overseas Pakistani moved up by 12.5% YoY to $8.04bn from $7.14bn recorded in July-Sept FY21