Pakistan's current account deficit posted a notable decline of some 73 percent during August 2017 compared to July 2017 supported by higher home remittances and goods exports inflows. According to State Bank of Pakistan's statistics released on Tuesday, current account posted a deficit of $550 million in August 2017 against $2.051 billion in July 2017, depicting a drastic decline of $1.501 billion.
Economists said that the significant decline in current account deficit in August 2017 has been mainly attributed to some growth in goods' exports and home remittances inflows. During August, Pakistan received home remittances amounting to $ 1.955 billion, up 27 percent compared to July 2017, in which some $ 1.542 billion inflows were arrived.
Khurram Schehzad, Chief Commercial Officer (CCO) JS Global said that simply there are two reasons, ie, higher home remittances sent by overseas Pakistanis and 15 percent growth in goods' exports in August 2017. He said Foreign Direct Investment (FDI) inflows statistics are also encouraging as it posted 155 percent increase in two months of this fiscal year. "We believe that improving home remittances and FDI inflows along with increase in export will reduce the pressure on external account in coming months," he added.
However, according to SBP, year-on-year basis combined deficit of first two months of this fiscal year (FY18) is some 102 percent higher than the same period of last fiscal year (FY17). Cumulatively, current account deficit swelled by $1.314 billion to reach $ 2.601 billion in July-August of FY18 compared to $1.287 billion in the corresponding period of FY17.
Economists said higher growth in imports has pushed the current account deficit to $ 2.6 billion in just two months of this fiscal year and the current account deficit in first two months is much higher than expectations. The government has projected a $10.4 billion current account deficit for FY18 ahead of higher goods deficit, they added.
The detailed analysis showed that cumulative deficit of goods, services and income rose by 27 percent during the period under review. Combined deficit of goods, services and income surged to $ 6.723 billion in first two months of this fiscal year against $ 4.903 billion in the same period of last fiscal year, showing an increase of $1.820 billion.
With $8.982 billion imports and $ 3.932 billion exports, the country's goods deficit surged to $5.050 billion during July-August of FY18 compared to $3.685 billion in the corresponding period of FY17. During the period under review, services trade deficit stood at $983 million as exports stood at $816 million and imports $1.799 billion. Similarly, with $792 million payments and $ 102 million receipts, primary income deficit surged to $ 690 million during July-August of this fiscal year.
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