KARACHI: The country's current account posted a $13 million surplus in May supported by sharp decline in the import bill. The latest data released by the State Bank of Pakistan (SBP) showed that Pakistan's current account deficit turns into surplus of $13 million in May 2020 compared to $1 billion deficit in May 2019 and some $530 million in April 2020. This is the second surplus during this fiscal year. Previously, current account witnessed surplus by $90 million during October 2019.
Economists said that the reason for current account surplus is massive decline in the country's import bill. They said that it's a good sign for the economy and definitely will help to ease pressure on the external account. Pakistan's economy is already facing a tough time due to COVID-19 and estimated to post a negative 0.4 percent GDP growth. According to the State Bank, year on year basis the current account deficit posted a notable decline of 74 percent during the first eleven months of this fiscal year (FY20). The current account deficit for July-May FY20 clocked in at $3.288 billion compared to $12.453 billion in the same period last fiscal year, depicting a notable decline of $9.165 billion.
Economists said that massive contractions in the goods and services import bill was the primary factor behind the improvement in the current account, however, the goods and services sector exports have not yet registered any significant growth.
During the period under review, cumulative deficit of trade, services and income dropped to $25.941 billion in first eleven months of FY20 as against $35.095 billion in the corresponding period of last fiscal year (FY19).
With $38.878 billion imports and some $20.937 billion exports, the country's overall goods deficit was decreased by 29 percent to $17.941 billion in July-May of FY20.
During the period under review, services trade deficit stood at $2.7 billion with $5 billion exports and $7.75 billion imports. Similarly, income sector outflows stood at $5.8 billion as against inflows of $523 million, showing a deficit of $5.3 billion during the first eleven months of this fiscal year.
Analysts are expecting that by end of this fiscal year, the country's current account deficit will not be more than $4 billion as the import bill is expected to further shrink due to economic slowdown.
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