Pakistan’s current account deficit shrinks by 91% YoY in October

WEB DESK: In October 2023, the current account deficit witnessed a significant expansion, soaring by 60.87 per cent month over month (MoM) to reach $74 million, in contrast to the $46 million deficit reported in September 2023.

It’s noteworthy that the State Bank of Pakistan’s (SBP) initial report indicated a mere $8 million deficit in the preceding month. However, revised data discloses that the actual deficit for that period was $46 million.

On an annual basis, the current account deficit exhibited a noteworthy improvement, with a 91 per cent year over year (YoY) decrease, as it amounted to $849 million in the same month last year.

Total exports experienced a 10.47 per cent MoM increase and a 17.78 per cent YoY rise, reaching $3.42 billion, compared to the previous month’s $3.1 billion and the same month of the previous year’s $2.9 billion.

Total imports, on the other hand, rose by 7.86 per cent MoM to $5.17 billion, compared to September’s $4.8 billion, but showed a 3.36 per cent YoY decline from October of the previous year.

Cumulatively in the 4MFY24, the current account deficit amounted to $1.06 billion, marking a substantial 66 per cent YoY improvement from the $3.11 billion deficit in 4MFY23.

Read more: Gold price remains unchanged

Additionally, workers’ remittances exhibited an 11.55 per cent MoM increase to $2.46 billion, compared to $2.21 billion in the preceding month.

On a yearly basis, remittances saw a 9.56 per cent YoY rise, standing at $2.25 billion in October 2022.

In the 4MFY24, workers’ remittances totaled $8.8 billion, reflecting a 13.31 per cent YoY decline from the $10.15 billion recorded in 4MFY23.

It’s worth noting that earlier in the year, remittances had been consistently decreasing due to the increased disparity between official and grey market rates.

Many non-resident Pakistanis opted for unofficial channels offering Rs20-25 higher exchange rates per dollar.

In response to these challenges, authorities, led by the army, initiated crackdowns against speculators, hoarders, and smugglers to curb illegal dollar outflows, effectively strengthening the PKR against the USD.

However, despite these measures, inflows for the month fell below street expectations.