Pakistan’s current account deficit fell sharply by 73% during the first five months of this fiscal year (FY20).
The country’s current account deficit stood at $1.821 billion in Jul-Nov of FY20 compared to $6.733 billion during the same period last year (FY19), depicting a remarkable decline of $4.912 billion according to the State Bank of Pakistan (SBP).
The decline was seen due to the decrease in trade deficit during the five months period.
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However, the current account deficit for the month of November turned negative as the surplus momentum could not be maintained in November 2019 due to some decline in exports.
On a monthly basis, the current account deficit stood at $319 million in November 2019 as compared to a surplus of $70 million in October 2019. The surplus last month was the first time in nearly four years that Pakistan reported positive numbers.
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The current account deficit (CAD) plunged by 73% to $319 million in November, as compared to $1,166 million in the same period last year. The decline in the current account deficit is driven by a 13% year on year decline in total imports along with a remarkable rise in the total exports.
The detailed analysis revealed a cumulative deficit of goods, services and income sector declined by 29 percent to $12.147 billion in Jul-Nov of FY20 down from $ 17.199 billion in the same period of FY19.
During the five-month period, the imports dropped to $18.31 billion as compared to $23.21 billion in the same period of the previous year. Exports, however, improved to $10.30 billion compared to $9.85 billion, according to the central bank.
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During the period under review, the services trade deficit stood at $1.619 billion with $2.165 billion exports and $3.784 billion imports.
According to different analysts, improvement in goods trade deficit along with the growth in exports has resulted in a massive reduction in the current account deficit during this fiscal year.
The federal government is making efforts to bring down the current account deficit and after a long gap successfully turned the deficit into a surplus in October 2019.
You can read more details here.
Why negative as in October 2019 current account was positive.