Pakistan’s current account deficit widens in July-Nov of ongoing FY

  • GDP enhances by 12.12pc, account deficit widens 90.62pc to (negative) $2.601bn

The country’s current account deficit is up to (negative) $2.601 billion in July-Nov of the current fiscal year owing to the declining exports and low direct investments, according to data released by the State Bank of Pakistan (SBP) on Tuesday.

The country’s Gross Domestic Product (GDP) has increased to $133.283 billion, up by 12.12 percent in July-Nov 2016-17, compared to $118.874 billion in five months of the previous fiscal year. According to the SBP’s projection, full year GDP would increase by 5 – 5.50 percent in the ongoing  fiscal year.

The current account deficit is widened by 90.96 percent to (negative) $2.601 billion in last five months of this fiscal year while it stood at (negative) $1.362 billion in the same period of last year.

The situation of current exports and imports has improved in October and November this year, but still, it is not much better while the remittances have also improve in November this year, the analyst said. According to him, the situation of balance of payments will further deteriorate if the trade gap would not shrink, and remittances and direct investment of the country would not improve in the remaining months.

“Despite lowest oil import bills in last five months, it is very curious for us that the trade deficit of the country is persistently rising, while on the other hand, the oil prices in the international market have started rising as compared with 2015-16,” the analyst said. With the international oil prices, the import bill of oil companies in Pakistan will enhance.

The central bank is facing payment pressure of international donor agencies including the International Monetary Fund (IMF) as the current account is still hovering in deficit, he added. Because of the pressure on dollar, the dollar exchange rate has gained 30 paisas and now it is being traded in the inter-bank market at Rs 104.85 today compared to $104.60 about 30-40 days ago.

The declining trend in the goods exports continued in July-November 2016-17 and the total exports of the country stood at $8.189 billion, down by 3.94 percent, in comparison with $8.542 billion in the same period last year.

The trade deficit of the country has increased to $11.775 billion in July-November 2016-17, up by 19.90 percent, as compared to $9.821 billion in the same period last year.

The country’s total foreign investment surged by 36.6 percent to $1.505 billion, mainly supported by foreign public portfolio investment which was improved by 151 per cent during July-Nov 2016-17. The direct investment declined by 45.2 percent to $459.8 million in July-Nov 2016-17. Out of this investment, the Chinese companies invested $156.5 million.

The remittances of the country fell by 2.4 percent to $7.875 billion in the first five months (July-November) of the current fiscal year, as compare to $8.073 billion received in the same period last year.

The gap in the remittances has shrunk in November to $197 million, 2.4 percent, as compared to the last year, while it was going above 3-4 percent down in the previous months of the current fiscal year. Pakistani workers remitted $7.875 billion in first five months, compared with $8.073 million received during the same period in the preceding year.