Pakistan's current account deficit hits 13-year low

A recently wrapped-up fiscal year 2023-24 has witnessed a significant decline in the country’s current account deficit (CAD), falling to the lowest in 13 years, according to the State Bank of Pakistan.

According to the press release issued by the SBP on Friday, the CAD dropped by 79 percent to $681 million from $3.275 billion in FY23.

Despite several economic challenges ahead, the country has achieved a major milestone.

“The current account deficit for FY24 stands at $681m, the lowest in 13 years,” said Tahir Abbas, head of research at Arif Habib Ltd.

However, the statistics showed an increase in the deficit in June. The recorded deficit was $329 million in the last month of FY24, compared to $284 million in May. 

The data showed a $45 million surplus during a month, it also displayed an increase of $490 million in June 2023.

“This significant decline was driven by a 6pc reduction in the trade deficit and an 11 percent increase in remittances,” added Abbas.

Through the export of goods in the last six months of the previous fiscal year, the country collected $31.09 billion, up from the $27.88 billion of FY2022-23. 

Meanwhile, the country imported goods of $53.17 billion and services of $10.12 bn.

The country received over $30 billion remittances in FY23, but it was still below than inflow of $31.3 billion in FY22.

Experts believe that the CAD may remain low in FY25 if the government persists in control over imports and growing remittances.