By Staff Reporter
KARACHI: The current account slipped back into deficit in October with a $112 million shortfall, reversing the previous month’s surplus, as imports jumped 13% from a year earlier and exports continued to weaken.
Data released by the State Bank of Pakistan on Monday showed the deficit after a revised $83 million surplus in September and a $296 million surplus in the same month last year. The deterioration was driven by a 13% year-on-year increase in goods and services imports to $6.32 billion, while exports fell almost 4% to $3.57 billion from $3.71 billion a year earlier. The trade deficit for goods and services widened to roughly $2.75 billion from $1.87 billion in October 2024. Workers’ remittances, a critical lifeline for the external account, rose 12% from a year earlier to $3.42 billion, from $3.05 billion in October 2024, helping to partially offset the trade gap.
“Pakistan’s external account showed mixed signals in October, with the country posting a $112mn current account deficit after a brief surplus in September. The deterioration was driven primarily by a 4% MoM widening in the trade deficit, as imports rose faster than exports amid recovering domestic demand,” Waqas Ghani, Head of Research at JS Globa. He added that remittances have played a pivotal role in stabilising the external account and have become even more important as external pressures resurface.
For the first four months of fiscal year 2026 (July-October), the current account recorded a cumulative deficit of $733 million, a 256% increase from the $206 million deficit in the same period last year. Gross foreign exchange reserves, excluding cash reserve requirements and special cash reserve requirements held against foreign currency deposits, stood at $14.50 billion, up 29% from a year earlier, providing a stronger buffer against external shocks despite the widening current account gap.
The October deficit ends a stretch of relatively contained external imbalances that had helped Pakistan rebuild reserves under a $7 billion Extended Fund Facility with the International Monetary Fund.
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