Pakistan’s current account deficit (CAD) has increased by more than 3 times during fiscal year 2017, reaching US $ 12.098 billion currently. This is the 2nd largest current account deficit Pakistan has seen during the last 14 years.
This information was disclosed by the State Bank of Pakistan (SBP) on its website. Their data shows that there was a very sharp increase in imports as workers’ remittances and exports continued to decline during the same period.
According to available data, CAD reached $12 billion during FY 2017, compared to $ 4.87 billion during the same period last year. This clearly shows an increase of US$ 7.231 billion in one year. Comparatively, during FY 2008, the current account deficit was at $ 13.8 billion.
During the last fiscal year, current account deficit was 4% of the Gross Domestic Product (GDP). On the other hand, the deficit during 2016 was 1.7% of the GDP.
Data shows that CAD is on the rise due to growing imbalance between external payments and receipts. Pakistan’s foreign exchange, exports, workers’ remittances all shrunk very sharply. On the other hand, imports and other external payments rose during the same time.
Pakistan’s exports during FY 17 were at US$ 21.66 billion and imports were at US $48.54 billion. This shows that trade deficit increased by US$ 26.88 billion.
An economic slowdown in the Gulf region has badly affected the Pakistani workers situated there recently. Many such workers have lost their jobs and this in turn is reflected in the decline in workers’ remittances during FY 2017.
During FY 2017 Pakistani workers remittances was at US$ 19.303 billion while in 2016 this figure was at US$ 19.917 billion. During this time, remittances have decreased by US$614 million in one year.