Despite slowdown Pakistan’s external account has been stabilized: Monthly Economic Outlook

Despite being confronted with multifaceted challenges, Pakistan's economy has witnessed significant improvement in some of its sectors during FY2020 like external account has been stabilized with current account deficit reduced by 78 percent, said Ministry of Finance in its monthly economic outlook for July 2020.

The report pointed out that even though both exports and imports have fallen sharply since the coronavirus outbreak. During FY2020, current account deficit is reduced by 77.9% to $ 2.9 billion (1.1 % of GDP) against $ 13.4 billion last year (4.8 % of GDP).

Exports declined by 7.2 % to $ 22.5 billion ($ 24.3 billion last year) during FY2020. The exports values were suppressed due to weak terms of trade, despite significantly higher quantum exports.

Imports declined by 18.2 % to $ 42.4 billion ($ 51.9 billion last year). Consequently, trade deficit reduced by 27.9 % to $ 19.9 billion ($ 27.6 billion last year). Export of services has declined by 8.6% to $ 5.4 billion ($5.9 billion last year). The import of Services declined by 24.3% and is $ 8.3 billion ($ 10.9 billion last year).

It said that workers’ remittances surged to a historic high level of $23.1 billion during FY2020 compared to $21.7 billion during FY2019, witnessing a growth of 6.5 percent and FDI increased by 88 percent and reached to $ 2.6 billion during FY2020 as compared to $ 1.4 billion in FY2019.

Talking about the coronavirus pandemic, the report said that preventive measures taken domestically and globally to stem the spread of the coronavirus pandemic are resulting into an immense negative impact on economic activity worldwide.

Economies of the world and its effects are sturdily being felt; Pakistan is in no exception to feel the heat. Pakistan's domestic production and exports have declined mainly due to depressed global demand and commodity prices.

The slowdown left adverse impact on tax and nontax revenues; whereas government spending is rising. However, the Government is mobilizing all of its available resources to provide maximum relief to the public. Among federal government’s relief measures, important and heavy weight is Ehsaas Emergency Relief Programme, under which, Rs 160.5 billion to 13.3 million beneficiaries till 27-07-2020 has been released to those suffering from lock down.

Moreover, State Bank of Pakistan (SBP) has disbursed Rs 6.4 billion for hospitals and Rs 10.4 billion for investment purposes and a sum of Rs 119 billion for wages till July 3, 2020. These measures, coupled with persistent decline in new cases of Corona in last four week are expected to further support economic activity, new long-term investment and employment generation.