The current account deficit has maintained its improvement despite volatile economic dynamics globally and nationally as it contracted by 73 percent – a massive $7.51 billion – year-on-year by the end of three quarters of the financial year 2019-20.
According to the State Bank of Pakistan (SBP), the current account deficit decreased to $2.78 billion during the period of July to March FY20 as compared to $10.284 billion recorded in the similar period of last financial year.
The current account deficit in the outgoing month of March was at one of the lowest levels in recent times at $6 million despite the exports of the country recording a sharp decline in the wake of the global economic slowdown due to the COVID-19 pandemic.
Imports of the country continued to decrease in the current financial year including the outing month however remittance inflows stood positive unexpectedly showing strong reflection on the current account’s position.
The trade deficit of the goods and services has dropped by 30 percent or $6.5 billion in the nine months of the financial year 2019-20. It decreased to $14.68 billion this year as compared to $21.2 billion recorded in the period of July to March last year.
On the other hand, remittance inflows during the said period recorded an addition of $959 million to stand at $16.9 billion.
It is believed that the prevailing economic slowdown will negatively impact the export receipts and inflows of remittances from April onwards which may be unfavorable for the current account that attainted a significant improvement in the last three quarters.
The sitting government took initiatives to dilute the shocks of global economic slowdown mainly with exporters’ support and additional incentives for remittances.