Current account surplus shrinks 96pc in April as imports surge

By Staff Reporter

KARACHI: The current account posted a slight surplus of $12 million in April 2025, a steep fall from the $1.2 billion recorded in the previous month and a 96 percent decline from the $315 million in the same month last year, the State Bank of Pakistan (SBP) data showed on Friday.

The drop was fueled by a sharp rise in imports, which overshadowed modest gains in exports and remittances.

The significant narrowing of the surplus reflects mounting pressures on Pakistan’s external accounts, driven by a 15% year-on-year jump in imports to $6.14 billion in April 2025, up from $5.34 billion a year earlier. Exports edged up 1.2% to $3.33 billion from $3.29 billion, while workers’ remittances—a lifeline for the economy—rose 13% to $3.18 billion. Despite these gains, the import bill’s rapid climb eroded the current account balance.

For the first ten months of the current fiscal year (10MFY25), Pakistan’s current account has swung to a surplus of $1.88 billion, a stark turnaround from the $1.34 billion deficit in the same period last year. This improvement owes much to subdued economic growth, persistent inflation, and policy efforts to rein in imports while nudging exports higher. High interest rates, though recently eased, have also played a role in curbing demand and narrowing the deficit.

Pakistan’s economy has been grappling with low growth and elevated inflation, twin challenges that have dampened domestic demand and helped shrink the current account gap. Restrictions on imports, alongside a push to boost exports, have been central to the government’s strategy. The recent decline in interest rates signals a shift toward stimulating activity, but the April data suggest that rising import costs could complicate this balancing act.

Analysts say the current account ‘unexpectedly remained in surplus ‘in April 2025, defying widespread market expectations of a deficit, after the central bank data revealed a significant increase in exports.

Brokerage Topline Research stood by its projections, despite the monthly volatility. “We maintain our FY25 current account surplus target of $2.5-3.0 billion, or 0.6-0.7% of GDP,” the firm said in a note.