Pakistan’s current account deficit hits lowest level since 2011

WEB DESK: Pakistan’s current account deficit has shrunk to its smallest in over a decade, thanks to robust growth in remittances and exports that outweighed a rise in imports.

The State Bank of Pakistan (SBP) reported on Friday that the current account deficit narrowed to $681 million, or 0.2 per cent of GDP, in FY24.

This marks a significant improvement from the previous year’s deficit of $3.27 billion and the average gap of $8.3 billion over the past five years. It is the smallest deficit recorded since FY 2011.

In June alone, the current account deficit was $329 million, up from $248 million in the previous month but down from a surplus of $490 million in June 2023.

The reduction in the trade deficit played a key role in narrowing the current account gap.

Strong exports of food and high value-added textiles, coupled with reduced import payments due to improved domestic agricultural output, moderate domestic demand, and favourable global commodity prices, contributed significantly to this outcome. The trade deficit in FY24 stood at $24.39 billion, a 5.7 per cent decline from the $25.86 billion recorded in FY23.

According to Mettis Global, exports saw a notable increase of 9.7 per cent, rising to $38.9 billion from $35.47 billion last year. Imports, on the other hand, increased by 3.2 per cent to $63.29 billion from $61.33 billion in FY23.

Additionally, workers’ remittances remained strong, bolstered by incentives and regulatory reforms encouraging the use of formal channels for inflows. Remittances were recorded at $30.25 billion, up 10.7 per cent from $27.33 billion the previous year.

This positive trend in the current account balance reflects Pakistan’s ongoing efforts to strengthen its economic stability through diversified exports and enhanced remittance flows.

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