Current account deficit shrinks 29pc in 11 months

KARACHI: The current account deficit (CAD) fell to $12.678 billion in July-May FY19, decreasing by 29.27 per cent, from $17.926bn in same period last year, reported the State Bank of Pakistan on Wednesday.

The primary contributor to the massive yet declining CAD was the balance of trade in goods and services which amounted to $30.056bn during 11MFY19, down 12.14pc, from $34.209bn in corresponding months last year.

In May, CAD plunged 47.19pc to $1.089bn, from $2.06bn while trade gap came in at a negative $2.896bn versus $3.355bn in same month last year.

Fall in imports was the most significant driver of CAD, as value of imports dipped 14.4pc to $8.838bn in 11MFY19, as against $10.33bn in similar period last year. Meanwhile, exports witnessed a negligible increase to $4.892bn in the eleven months, from $4.834bn.

The export figures were even more worrisome during May as the proceeds declined to $434 million on a yearly basis, from $455m. Imports, however, posted a decrease of 20.18pc to $910m as against $1.140bn in corresponding month last year.

The government has been trying to cut down the country’s massive CAD had crossed the $18bn-mark through a series of measures, including duties on some imported items and a series of devaluations of the local currency. While the former seems to have translated into reduced import bill, the latter is yet to result in any substantial increase in export proceeds.