July-April period: C/A deficit shrinks 71 percent on lower import bill

The country's external account continues to perform well as the current account deficit posted a notable decline of 71 percent during the first 10 months of this fiscal year, mainly due to lower import bill.

According to the State Bank of Pakistan (SBP), the current account deficit for July-April FY20 clocked in at $3.343 billion compared to $11.449 billion in the same period last fiscal year, depicting a decline of $8.1 billion.

Economists said that the massive reduction in the current account deficit will reduce pressure on external account. The reduced CA deficit is a positive sign for the overall economy, which is estimated to post a negative growth due to COVID-19, they added.

They said that massive contractions in the goods import bill was the primary factors of improvement in the country's current account deficit, however, the exports have not yet registered any noticeable increase during the period under review.

According to the SBP, cumulative deficit of trade, services and income narrowed down to $23.866 billion in first ten months of FY20 as against $31.56 billion in the same period of last fiscal year.

With $36.091 billion imports and some $19.65 billion exports, the country's overall goods deficit was decreased by 29 percent to $16.44 billion in July-April of FY20.

During the period under review, services trade deficit slide from $3.93 billion to $2.617 billion with $4.668 billion exports and $7.285 billion imports. Similarly, income sector outflows stood at $5.294 billion as against inflows of $486 million, depicting a deficit of $ 4.808 billion during the first ten months of this fiscal year.

The SBP has already predicted that country's current account deficit will be lower than previous years due to some regulatory measurers and constriction in the goods import bill. During the last fiscal year, current account deficit was declined 30 percent to $ 13.434 billion.