KARACHI: The country's current account deficit turned into surplus in the first month of this fiscal year supported by record-high remittances inflows. The State Bank of Pakistan (SBP) Monday reported that YoY, Pakistan's current account posted a surplus of $ 424 million in July 2020 compared to a deficit of $ 613 million in the same period of last fiscal year (July 2019). Previously, current account witnessed some $13 million surplus in May 2020. While, external account registered $100 million deficit in June 2020.
According to SBP, this is the fourth monthly surplus since last October and this strong turnaround is due to recovery in exports and record-high remittances with support from several policy and administrative measures by SBP and the federal government.
Economists also said that healthy growth in the home remittances and exports have largely contributed to swing the current account deficit into surplus in July this year. Surplus current account will also help to reduce the pressure on the country's foreign exchange reserves, they added.
Pakistan had received highest-ever workers' remittances amounted to $2.76 billion during July 2020. In terms of growth, remittances increased by 36.5 percent in July 2020 over July 2019 and 12.2 percent over June 2020. These inflows help turn the current account into a surplus.
In addition, MoM goods exports sustained strong growth of 20 percent to $1.853 billion in July 2020 compared to $1.582 billion in June 2020. However, YoY basis, exports in July 2020 declined by 14 percent compared to $2.217 billion in July 2019.
Economists said that demand and supply side disruption remain a peril to the growth of external sector of Pakistan and despite these challenges current account balance witnessed surplus, which is a positive sign for the economy.
They said that with support of some structural reforms, for the last two years, the country's current account is performing well and it posted $2.97 billion deficit during FY20 compared to $13.43 billion in FY19.
Collective deficit of goods trade, services, and income stood at $ 2.784 billion in first month of this fiscal year as against $ 2.953 billion in the same period of last fiscal year.
Goods import bills significantly declined from $ 4.185 billion to $ 3.629 billion in July 2020. With contraction in imports and strong growth in exports, the country's overall goods trade deficit fell to $ 1.736 billion in July 2020 as against $ 1.968 billion in corresponding period of last fiscal year. During the period under review, deficit of services sector was $ 362 million with $ 436 million exports and some $798 million imports.
Copyright Business Recorder, 2020
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