By Staff Reporter
KARACHI: The current account deficit narrowed sharply in the first quarter of the current fiscal year amid a decline in imports, which is being driven by slowing domestic demand as the central bank aggressively tightens monetary policy in recent months to tame runaway inflation.
The current account deficit, which measures the flow of goods, services and investments into and out of the country, narrowed 37 percent to $2.2 billion in July-September quarter of fiscal 2022-23, State Bank of Pakistan data showed.
Exports of goods jumped 5 percent to $7.6 billion in July-September FY2023. Imports of goods fell 8 percent to $16.1 billion. “In September, the current account deficit declined for the 3rd month in a row,” the central bank said on its official Twitter handle.
“It fell to $0.3 billion, less than half the level in August. In Q1FY23, the CAD has fallen to $2.2 billion from $3.5 billion in Q1FY22, mainly reflecting a decline in imports.”
Analysts said the first quarter current account deficit number is slightly better than expectation. They said a fall in petroleum imports is the main reason for a better current account gap in the first quarter.
The country’s trade deficit shrank over one-fifth to $9.2 billion in the first quarter on falling imports. Imports amounted to $16.3 billion during the July-September period, down $2.4 billion, or 12.7 percent, while exports stood at a mere $7.1 billion, up $129 million, or 1.8 percent, during the July-September period.
The central bank forecasts the current account deficit to be around 3 percent of the gross domestic product during the current fiscal year.
However in its last policy statement the central bank said the impact on the current account deficit is likely to be muted, with pressures from higher food and cotton imports and lower textile exports largely offset by slower domestic demand and lower global commodity prices.
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