Pakistan’s current account deficit shrinks by 68% in July-Oct period

Pakistan’s current account deficit (CAD) currently stood at $2.8 billion as a result of reduced imports in the first four months of financial year 2022-23, says State Bank of Pakistan (SBP).

According to the State Bank, the current account deficit was recorded at $2.8 billion against the level of $5.3 billion when compared with the corresponding period of the last year 2021-22.

These figures mean that the current account deficit shrank 68 percent on year-on-year (YoY) basis, courtesy of government curbs that put have successfully brakes on certain imports.

On the other hand, the monthly stats for October shows that Pakistan’s current account deficit jumped by $204 million or 56 percent to $567 million for October 2022 as compared to September’s $363 million.

Hence, the continuous decline in imports has helped reducing the current account deficit in period of July-Oct 2022 with imports of $2.7 billion. It means imports shrunk by 11.6 percent to the level of $2.7 billion and exports increased by 2.6 percent ($0.2 billion) when compared with Jul-Oct 2021.

However, CAD was at $ 0.57 billion in Oct 2022 against a deficit of $0.36 billion in Sep 2022, the State Bank said in a series of tweets posted on Monday.

According to the data, the exports of goods increased from $9.56 billion in Jul-October 2021-22 to $9.8 billion in the same period of the current fiscal year while the imports decreased from $23.32 billion to $20.6 billion in the period under review.

During these four months, the workers’ remittances saw a cut of 9 percent or $927 million to $9.901 billion. It is said that the reasons behind this trend are switching to informal channels on the higher spread between the inter-bank and open market, massive inflation, and increased interest rates in foreign countries.

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