KARACHI: Current account deficit widened by more than 90 per cent year-on-year to $4.7 billion in July-Jan, the State Bank of Pakistan (SBP) reported on Friday.
A current account deficit indicates that Pakistan is a net borrower from the rest of the world. The widening gap is expected to spell trouble for the country’s external sector with negative consequences for the exchange rate.
The deficit in the trade in goods and services amounted to $15.2bn in the first seven months of 2016-17, up 22.1pc from a year ago. While the country failed to grow its exports in July-Jan, its imports rose by 9.1pc over the same period.
The current account deficit was 2.5pc as a percentage of GDP in July-Jan as opposed to 1.5pc during the same period in the preceding year.
Shrinking remittances, growing imports and stagnant exports have put the external sector under pressure in recent months.
Cuts in fiscal spending in the Middle East in the wake of low oil prices have had an adverse impact on remittances sent by overseas Pakistanis. Workers’ remittances amounted to $10.9bn in the seven months against $11.1bn inflows recorded in the comparable period of last year.
Published in Dawn, February 18th, 2017