WASHINGTON: Pakistan was among 15 top deficit economies of the world in 2017 when its current account deficit increased to $12.4 billion, said an International Monetary Fund (IMF) report released on Tuesday.

The United States, with a deficit of $466bn in 2017, remained the world’s largest deficit economy.

India, with a deficit of $48.7bn in 2017, is fourth on the list. Pakistan is 14th while Oman is the 15th.

Britain, which had a deficit of $106.7bn, is the world’s second largest deficit economy followed by Canada. Others on the list include Turkey, Australia, Argentina, Algeria, Mexico, Indonesia, Egypt, France and Lebanon.

Country’s current account deficit increases to $12.4bn

Although India is way ahead of Pakistan in borrowing money, its larger economy provides it with a cushion that Pakistan does not have. Although in dollar terms India’s $48.7bn deficit is much larger than Pakistan’s $12.4bn, it’s only 1.9 per cent of India’s GDP. Pakistan’s current account deficit amounted to 4.1pc of its GDP in 2017.

In 2014, Pakistan had a current account deficit of $3.1bn, which was 1.3pc of its GDP. In 2015, the deficit decreased to $2.7bn, one per cent of its GDP. But in 2016, Pakistan current account deficit almost doubled to $4.9bn, which was 1.7pc of its GDP.

In 2017, the deficit increased exponentially to $12.4bn, which is 4.1pc of the country’s GDP.

On the positive side, Germany was the largest surplus economy in 2017, followed by Japan and China. Germany had a current account surplus of $296.4bn, Japan of $196.1bn and China $164.9bn.

But both Germany ($297.5bn) and China ($202.2bn) had larger surpluses in 2016. Japan, however, increased its surplus to $196.1bn in 2017 from $188.1bn in 2016.

The IMF report, however, noted that global current account balances were broadly unchanged in 2017, with minor shifts in some regions.

Overall global balances — defined as the absolute sum of surpluses and deficits — remained at about 31.4pc of world GDP in 2017.

Last year’s small changes relative to 2016 continued the trend in recent years of greater concentration of surpluses and deficits in advanced economies.

On the surplus side, China’s current account balance continued its gradual decline, largely offset by a rising surplus in Japan. The factors include a depreciating yen, a further increase in current account balances of euro area debtor countries, and a resurgence of surpluses in oil-exporting countries on the back of recovering oil prices.

On the deficit side, the United States continued to be the main global borrower, accompanied by growing current account deficits in some emerging market economies, particularly Argentina, India and Turkey.

These deficits were partially offset by smaller deficits in the United Kingdom — supported by further sterling depreciation — and in some large commodity-exporting economies, thanks to strengthening commodity prices.

The report showed that the United States had become an increasingly large driver of global deficits, accounting for 43pc of all global deficits last year, up from 39pc in 2016.

Published in Dawn, July 25th, 2018