Pakistan’s current account deficit nosedives 76pc to $50m in February

Pakistan’s current account deficit (CAD) for February declined 75 per cent year-on-year (YoY) and 76pc month-on-month (MoM) to $50 million, compared to a deficit of $197m in Feb 2020 and $210m last month.

This marks the third consecutive month the current account has recorded a deficit, after registering a surplus for five months in a row.

Overall, during the first eight months of FY21, the current account shows a surplus of $881m compared to a deficit of $2.74 billion in the corresponding period last year.

The narrowing of the deficit in February is largely attributable to continued strong growth in workers’ remittances and a sustained recovery in exports since November 2020, which more than offset the increase in imports due to domestic food shortages and recovering economic activity.

In February, the MoM improvement was due to a 45pc decline in primary income deficit, whereas the YoY improvement was attributable to 8pc and 24pc rise in total exports and remittances, respectively.

Total exports (goods and services) during the month jumped 3pc to $2.65bn compared to the $2.58bn logged in the previous month. Similarly, on a yearly basis, total exports witnessed an increase of 8pc in Feb 2021 against $2.46bn in Feb 2020.

In contrast, the combined imports of goods and services during the month under review grew 2pc to $5.184bn as opposed to $5.07bn recorded in January. On a yearly basis, overall imports of goods and services soared 17pc from $4.437bn in February last year.

This resulted in a trade deficit of $2.535bn in Feb 2021, up 1pc MoM and 28pc YoY.

Cumulatively, during 8MFY21, total exports stood at $19.87bn, shrinking 2pc YoY, whereas total imports grew 4pc YoY to $37.296bn, resulting in a trade deficit of $17.42bn, up 13pc YoY.

Workers’ remittances by overseas Pakistanis registered a growth of 24pc YoY to $2.26bn during Feb 2021, while on a monthly basis they remained flat.

During the first eight months of FY 21, the continued healthy growth in inflows took the cumulative figure to a record level of $18.74bn, up 24pc YoY.