Led by a sharp decline in the goods import bill, the country's current account deficit plunged by 72 percent during the first seven months of this fiscal year (FY20). According to the State Bank of Pakistan (SBP), the current account deficit declined by $6.825 billion to $2.654 billion during July-January of this fiscal year compared to $9.479 billion in the same period of last fiscal year (FY19).

Economists said the country's balance of payments continues to improve on the back of mass reduction in good imports, which declined by 20 percent to $ 32.489 billion during this fiscal year. The improvement on external account has also helped the government to build the declining foreign exchange reserves and stabilize the exchange rate, they added.

They said Pakistan's current account can further improve with some significant growth in the country's exports. They believed that with concrete efforts and exploring new markets, Pakistan can achieve some 10 percent growth in exports.

The SBP reported that collective deficit of goods trade, services and income stood at $17.196 billion in first seven months of FY20 against $23.867 billion in the corresponding period of FY19.

With a massive contraction in imports, the country's goods trade deficit fell 35 percent to $11.644 billion in July-January of FY20 compared to $18.353 billion in the same period of last fiscal year. During the period under review, goods exports witnessed slight increase of 2 percent to $14.442 billion. With $3.237 billion exports and $5.211 billion imports, services sector registered $1.974 billion deficit. Income sector inflows were $374 million against outflow of $3.952 billion, resulting in $3.578 billion deficit.

The SBP is expecting more improvement in current account deficit in coming months supported by lower imports. As per the SBP estimates, current account deficit for FY20 is likely to stay within the range of 1.5-2.5 percent of GDP.