The current account deficit has narrowed down by 27 percent in the 10 months of the current financial year 2018-19, which is $4.2 billion lower than the deficit recorded in the last financial year. The reduction is mainly driven by import compression and a healthy growth in workers’ remittances.
According to the data updated by State Bank of Pakistan (SBP), the current account decreased to $11.5 billion in the period of July-March this year as against $15.8 billion last year.
The current account deficit in April grew by 42 percent when compared with March. It increased to $1.24 billion from $822 million in March and from $278 million in the preceding month of February.
The trade deficit fell 12.82 percent to $26.302 billion in July to April 2018-19 financial year, with imports having declined 7.88 percent to $45.471 billion from $49.360 billion. Exports remained flat with a negligible growth of 0.12 percent in 10 months of this financial year at $19.169 billion compared with $19.191 billion in the same period last year.
Furthermore, the remittances inflow grew by 8.4 percent in the ten months of FY19 crossing a market of $17 billion. It played a major role in narrowing down the current account deficit.
Despite the improvement in the current account and a noticeable increase in official bilateral inflows, the financing of the current account deficit remained challenging.
With two months left to close the financial year, the government’s target to reduce the trade deficit by $6 billion seems next to impossible at this stage.