Record income outflows push current account deficit to $270 million

ISLAMABAD: In a significant economic update, Pakistan has recorded a current account deficit of $270 million, driven primarily by a substantial increase in the primary income deficit, according to the latest data released by the State Bank of Pakistan (SBP).

In contrast, the country recorded a current account surplus of $499 million last month, and a $155 million surplus in May 2023.

Over the first 11 months of FY24 (11MFY24), the cumulative current account deficit was $464 million, reflecting an impressive 87.7 per cent year-on-year (YoY) improvement compared to the $3.77 billion deficit recorded during the same period in FY23.

The data revealed that in May, Pakistan faced a primary income deficit of $1.43 billion, marking the highest-ever monthly outflow of $1.5 billion in the primary income account. This substantial outflow was a key contributor to the overall current account deficit.

On a positive note, the country’s total exports in May increased by 15.4 per cent YoY, reaching $3.7 billion compared to $3.2 billion in the same month last year. This also represented a 12.7 per cent rise from the $3.28 billion recorded in the previous month.

Conversely, total imports in May rose by 25.3 per cent YoY to $5.93 billion, up from $4.73 billion in May last year, and increased by 12.2 per cent from the previous month’s imports.

Consequently, the trade deficit in goods and services widened by 45.9 per cent YoY to $2.23 billion and expanded by 11.4 per cent on a monthly basis. Cumulatively, the trade deficit for 11MFY24 stood at $21.82 billion, marking an 11.4 per cent YoY decline compared to the $24.64 billion deficit in 11MFY23.

In terms of overall trade performance during the first 11 months of the current fiscal year, exports rose by 9.3 per cent YoY to $35.81 billion, compared to $32.77 billion in the same period last year.

Imports saw a marginal increase of 0.4 per cent YoY, totaling $57.63 billion in 11MFY24, up from $57.41 billion in the corresponding period of the previous year.

The data also highlighted a significant surge in workers’ remittances, which increased by 54.2 per cent YoY in May to $3.24 billion, compared to $2.1 billion in May 2023. On a monthly basis, remittances rose by 15.3 per cent, up from $2.81 billion in the previous month.

Cumulatively, workers’ remittances for 11MFY24 amounted to $27.09 billion, showing a 7.7 per cent YoY rise from $25.15 billion in 11MFY23.

These figures underscore the mixed economic trends faced by Pakistan, with notable improvements in exports and remittances being offset by rising deficits in the current and trade accounts, primarily driven by significant primary income outflows.

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