By Staff Reporter
ISLAMABAD: Pakistan’s current account deficit plummeted to its lowest level in 13 years, fueled by a surge in exports and remittances from overseas workers, the central bank’s data showed on Friday.
The South Asian nation recorded a current account deficit of $681 million in FY24, down 79 percent from the previous year’s $3.3 billion shortfall. The deficit decreased to 0.2 percent of gross domestic product (GDP) from 1.0 percent in FY23.
The improvement was driven by an 11 percent decline in the goods trade balance to $22 billion, as exports rose 12 percent to $31 billion and imports increased by only 1 percent to $53 billion. However, the services trade deficit widened by 122 percent to $2.3 billion due to a 17 percent rise in services imports.
Remittances from Pakistanis working abroad rose by 11 percent to $30.2 billion in FY24, with a significant rebound in the second half of the year due to currency and economic stability.
While the current account deficit narrowed significantly in FY24, it widened to $329 million in June, exceeding expectations due to a higher primary deficit driven by dividend repatriation by overseas investors. The primary deficit reached a record high of $8.6 billion in FY24, with 85 percent of the deficit recorded in the last two months.
Analysts noted that the significant improvement in the current account deficit is a positive development for Pakistan’s economy, but the high primary deficit in the last two months is a concern.
“Pakistan’s current account deficit has narrowed significantly, which is a positive development for the economy,” said an analyst at Topline Securities. “However, the high primary deficit in the last two months is a concern.”
The central bank’s clearance of dividend/profit repatriation is likely to have contributed to the higher primary deficit, according to analysts.
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