Current account deficit shrinks 31.7pc

The Newspaper's Staff Reporter Published July 18, 2019

The CAD has been at the heart of the erosion of the country’s foreign exchange reserves. — AFP/File

KARACHI: The crucial current account deficit (CAD) shrank by another 31.7 per cent in the July to Jun period according to latest data released by the State Bank on Wednesday. The CAD came in at $13.587 billion in this period where it was $19.897bn in the same period last year. It has now fallen to 4.8pc of GDP for July to June this year from 6.3pc last year.

The CAD has been at the heart of the erosion of the country’s foreign exchange reserves that eventually forced the government to seek an IMF bailout.

But not all was good news. The data showed that exports of goods actually shrank by $500 million from same period last year, coming in at $24.217bn where they were $24.768bn in FY2018. This was a 2.2pc deceleration in exports from a 12.6pc acceleration in their growth last year. Out of this, $200mn shrinkage in exports of goods came in the month of June compared to the same month last year.

Imports of goods shrank even faster at 7.3pc or by $4.156bn, coming in at $52.436bn in July to June 2019 compared to $56.592bn in the same period last year. According to the State Bank’s third quarterly report released a few days ago, a large part of the fall in imports is attributable to the end of machinery imports as the early harvest phase of CPEC draws to an end, followed by falling oil prices and restrained imports of LNG for a number of months when power generation was suppressed.

Balance of trade in services also showed a contraction of $1.803bn, entirely on the back of imports falling from $11.356bn to $9.55bn in the period being reported.

Workers remittances rose by $1.928bn in the same period, coming in at $21.842bn for the period July to June 2019.

The capital account showed rising external indebtedness of the country which incurred massive net liabilities of $12.048bn this year where the same figure was $8.855bn for the period last year. Of these, $5.495bn were incurred by the central bank and $3.904bn by the central government.Unclassified liabilities were $2.016bn, where they stood at $494 million in the same period last year.

Published in Dawn, July 18th, 2019

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Zuk

Jul 18, 2019 03:01pm

Your reporter is utterly wrong in saying that the price of oil decreased in July 18 to June 19 compared to last fiscal year. Its exact opposite. Average Brent/Arabian Light during outgoing financial year was $ 72 whereas last fiscal it was $ 59 approximately. Which means current year it's 22% higher than last fiscal. If price had remained the same trade deficit would have gone down by another $3.5 billion.

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Vikas

Jul 18, 2019 03:51pm

That’s not good. The way the deficit has been controlled is shrinking the economy. It I guess there is no other choice. Pakistanis will have to start to eat grass if they want to improve the state of the nation. That means sacrifices. Stop using imported stuff If a thing is not made in Pakistan stop using it.

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Enlightened One

Jul 18, 2019 06:09pm

While it is indeed very important to monitor these economic indicators, one must realize that these are just temporary changes while the economy corrects itself. Now that a capable and honest leader is at the helm, things will only get better. Keep doing the right things, and star focused positive about the future. Also, explain what is the meaning of each of these indicators, and their relevance to an average person. Why should someone care if the Current Account Deficit comes down, or exports go down? Explain it in a way that a 7 year old child can understand these statistics. Then you will see the surge of interest and positive behavior which will result in improved statistics! Provide a relevance and a reference to an average person.

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Ibrahim

Jul 18, 2019 07:52pm

So, give Imran Khan some credit.

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yaqoot

Jul 18, 2019 10:18pm

I cant understand the math at all, imports are USD 52 Billion, exports are USD 24 Billion, remittances in USD are USD 21 Billion, which means, 24+21 = 45 Billion in USD availability in the market, then why is our CAD at 11 Billion? should be 52 - 45 = USD 7 Billion?, I can only assume the rest of the dollar demand is merely to pay off our loans to the IMF/China and Local Lenders? can someone work out the math on the CAD, I don't see why the Pak Rupee is taking a beating like it had recently? the US alone runs a CAD of 1/2 Trillion USD, other countries do and yet the currencies in these countries don't take a beating like our Rupee? something is fishy in our country and there are mafias who need to be eradicated for sure.

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