The current account posted its highest monthly surplus of $1,195 million in March (the previous high was $981 mn in August 2012). That is primarily due to record high remittances of $4,055 million (the previous high was $3,242 mn). There is nothing more to the story. The party is mainly due to upbeat inward remittances.
SBP expects a current account surplus for the year and estimates SBP reserves to reach $14 billion. This implies less pressure on the PKR and higher chances of further monetary easing in the calendar year.
The current account posted a surplus of $1.9 billion in 9MFY25 compared to a deficit of $1.7 billion in the same period last year. The balance of trade—both goods and services—worsened by 16 percent and 6 percent, respectively.
Overall, the trade balance stood at $21.0 billion, increasing by 15 percent or $2,699 million. The balance of primary income decreased by 14 percent to $6.5 billion. Overall, trade and primary income deficits increased by $3,498 million.
Despite that, the current account balance is improved by $3,511 million – as the secondary income balance is enhanced by $7,009 million or 31 percent – within the star performer is home remittances – up by 33 percent or $6,991 million to $28,029 million in 9MFY25. This is 90 percent of goods and services exports combined.
Imports in March 2025 were up 8 percent (YoY) to $4.95 billion, dipping 2 percent from the previous month. In 9MFY25, due to a pick-up in economic demand and the opening of imports, the toll was up 11 percent to $43.4 billion. This is even though commodity prices have been generally lower this year so far, which implies that volumes of imports are picking up sharper than what the data depicts.
Petroleum imports: Petroleum products and crude volumes are up 10 percent and 15 percent, respectively. In dollar terms, the value declined by 3 percent for the former while remaining unchanged for the latter. There is a case of less (confined to Baluchistan) diesel smuggling from Iran in this fiscal year.
Then, the imports are higher than the demand, as overall storage is whole and refineries’ ullage is choked. Thus, because of high inventories, petroleum imports are likely to taper off. The government is wisely not passing on the impact of falling international oil prices to the consumers, which would keep the demand in check and so the overall value of petroleum imports in the last quarter.
There is a marginal pick-up in demand across the board, which is visible in the growth of imports. However, the toll is to remain under control and would not cause any problem seeing the trajectory of flying home remittances.
The story of exports is similar. The toll stood at $2.8 billion in March – up by 10 percent (YoY) and 6 percent (MoM). In 9MFY25, the goods exports are up 8 percent to $24.7 billion. The story is consistent this year so far – rice exports bonanza is weaning off (down by 13% to $2.3 bn), within textiles, there is double-digit growth in knitwear, bedwear, towels, and readymade garments, while cotton yarn and cotton cloth exports are on a decline.
The story is worrying for the local yarn and cloth industry, which is closing fast due to the influx of raw material imports from China. China’s cost is low, and it dumps textiles and other products in Pakistan. The exporter has a tax (cashflow) advantage on imports under the EFS scheme, and perhaps it is being abused, as there are signs of raw material imported under EFS being used for domestic consumption.
The problem of dumping is only going to increase as the Trump regime’s imposition of tariffs is forcing China and others to divert products to other markets, and they may be selling below cost to manage cashflows. This will adversely impact Pakistan’s exports to non-US countries, where China and others are dumping textile products. Not to mention the challenge of direct exports to the US due to tariffs.
That might impact the trade balance going forward. Reliance on home remittances and services exports is expected to increase, as the global goods market is likely to shrink in the post-Trump tariff world order.
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