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Current account slips back into deficit amid rising imports: SBP report

Current account slips back into deficit amid rising imports: SBP report

Web Desk
Jun 17, 2025

KARACHI: Pakistan swung back to a current account deficit of $103 million in May, reversing a brief surplus in the previous month, as rising imports and falling exports widened the country’s trade gap, central bank data showed on Tuesday.

The deficit follows a revised surplus of $47 million in April, but remains sharply lower than the $235 million gap recorded in May last year, reflecting a 56 per cent year-on-year decline.

The trade deficit widened to $3 billion in May, up 52 per cent from a year earlier and 16 per cent from April. Analysts say the increase in imports alongside a drop in exports was the key factor behind the deterioration.

“The return to deficit was expected, given the sharp jump in the trade gap last month,” said Waqas Ghani, head of research at JS Global. “Export earnings have slowed, while import demand, especially for energy and machinery, has picked up.”

Despite May’s shortfall, Pakistan’s current account remains in surplus for the fiscal year so far. From July to May, the country posted a surplus of $1.81 billion, compared to a deficit of $1.57 billion during the same 11-month period last year.

Total exports of goods and services fell to $3.15 billion in May, down 15 per cent from the previous year, while imports rose 7 per cent to $6.36 billion. Remittances from overseas workers, a key source of foreign currency, climbed more than 13 per cent year-on-year to $3.69 billion in May.

Economists say a combination of weak domestic demand, high inflation, and import controls has helped narrow the current account imbalance over the past year. The central bank’s high interest rate policy, which it began easing recently, also contributed to the improvement.

Pakistan’s external position remains under watch as the country eyes a new loan programme from the International Monetary Fund (IMF) amid lingering pressure on its foreign reserves and financing needs.