Pakistan’s current account deficit shrinks to $1.2 billion, reflecting decline in imports

According to figures provided by the State Bank of Pakistan (SBP) on Wednesday, Pakistan’s current account deficit (CAD) decreased to $1.2 billion in July from $2.2 billion in June, reflecting a 45.45 per cent month-over-month decrease.

The SBP ascribed the dip to a significant reduction in energy imports and ongoing moderation in other imports.

“The narrower deficit is the result of wide-ranging measures taken in recent months to moderate growth and contain imports, including tight monetary policy, fiscal consolidation & some temporary administrative measures,” it said in a tweet.

But the current account deficit widened by 42 per cent year over year. In July 2021, a deficit of $851 million was reported as opposed to a deficit of $1.1 billion this year, according to the online financial statistics and analytics portal Mettis Global.

The trade deficit in services, which is still negative, decreased by 62 per cent month over month as a result of a 40 per cent decline in imports and a 17 per cent decline in exports. According to the figures, the trade balance in services was $260 million in July as opposed to $682 million in June.

The Mettis Global study showed a 9 per cent reduction in the trade deficit year over year.

It also pointed out that worker remittances, which it referred to as the foundation of the economy, fell by 9 per cent from one month to the next, coming in at $2.52 billion in July as opposed to $2.76 billion in June.