ISLAMABAD, Nov 6: The current account deficit in the first quarter (July-September) of the current fiscal shrank by $607 million to $2.145 billion as compared to $2.752 billion over the corresponding period last year reflecting slight improvement in the trade balance.

Official figures compiled by finance ministry showed that as percentage of projected gross domestic product the current account deficit in the quarter stood at 1.3 per cent as against 1.9 per cent in the corresponding period last year.

According to official statistics the exports (on fob basis) grew at an average rate of 5.8 per cent to $4.355 billion during the quarter under review as against $4.118 billion the same period last year. Exports had grown by an average 3.3pc in 2006-07.

On the other hand, imports showed an easy trend and recorded a fall of one per cent to $6.755 billion during the quarter as against $6.822 billion the same period last year.

During the last fiscal year imports had witnessed a growth of 8.2 per cent over the previous year.

The trade deficit showed a contraction of $304 million to $2.4 billion during the quarter from $2.704 billion the same period last year. Import appears to be on the path of moderation and is expected to grow in the range of 6.5 per cent to 7 per cent during the current fiscal.

Adviser to the finance ministry Dr Ashfaq Hassan Khan told Dawn that the narrowing of trade deficit was the direct result of improvement in exports on the one hand and a marginal decline in imports on the other. The trade balance of Pakistan had widened in recent years on the back of strong economic growth sustained by domestic demand, he observed.

He said the improvement in the trade balance was an encouraging development and would have positive impact on the country’s balance of payment.

Invisible balance maintained a surplus of $141 million during July-September 2007-08 as against a deficit of $101 million during the same period last year.

According to the statistics, private transfers also registered an improvement of 19.3 per cent, rising from $2.199 billion to $2.624 billion during the quarter under review. Workers’ remittances also grew by over 21.6 per cent to $1.500bn.

O the basis of first quarter’s performance it was expected that both trade and current account deficits would further shrink during the current fiscal year, he added.

The country added $1 billion in its reserves in the first quarter to $16.14 billion by end September 2007 from $15.14 billion in June 2007.