ISLAMABAD: The current account deficit has significantly reduced, narrowing down to US $ 0.5 billion during July-March FY 2024, compared to US $ 4.1 billion in the same period last year.
According to Pakistan Economic Survey 2023-24 launched here on Tuesday, despite an uncertain global economic environment during the period, the government’s appropriate measures have improved the current account performance.
This reduction in the current account deficit has made external pressures sustainable and mitigated the risks associated with external financing difficulties.
Pakistan’s external account improved considerably during July-March FY 2024 as CAD narrowed down significantly by 87.5 percent to US $ 0.5 billion compared to US $ 4.1 billion last year.
The financial account also witnessed net inflows of US $ 4.2 billion, mainly augmented by inflows from friendly countries and official inflows, in sharp contrast to net outflows of US $ 1.1 billion during July-March FY2023.
The improved inflows in the financial account in July-March FY 2024 materialized amid the successful implementation of reforms agreed as part of the Stand-By Arrangement (SBA) with IMF.
The increase in CAD and financial support from bilateral and multilateral development partners have resulted in the building of foreign reserves. Specifically, reserves increased to US $ 8.0 billion by the end of March 2024 from US $ 4.4 billion at the end of FY2023.
The better performance of the external sector, coupled with the accumulation of foreign reserves, has instilled renewed confidence in the Pakistani rupee.
According the Survey launched the global merchandise trade for 2023 declined by 5 percent to US$24.01 trillion owing to global slowdown, trade fragmentation and geopolitical tensions.
According to WTO, global merchandise trade is expected to grow by 2.6 percent in 2024 and 3.3 percent in 2025. Downside risks includes: geopolitical tensions, rising protectionism, policy uncertainty, and supply disruptions.
Pakistan’s external account improved considerably during Jul-Apr FY2024 as CAD narrowed down by 94.8 percent to US$0.2 billion as compared to US$3.9 billion same period last year.
Trade deficit of goods contained by 21.6 percent to US$17.7 billion in Jul-Apr FY2024 as compared to US$22.6 billion last year on account of significant decline in imports.
The services account deficit reached US$1.9 billion in Jul-Apr FY2024 as against US$0.5 billion last year, owing to a sharp increase in services imports.
The primary income account deficit increased by 34.8 percent to US$6.1 billion in Jul-Apr FY2024, as against deficit of US$4.6 billion due to higher dividend repatriation and interest payments.
Remittances grew by 3.5 percent during Jul-Apr FY2024 and recorded at US$ 23.8 billion as against US$ 23.0 billion last year, owing to structural reforms related Trade and Payments.
