Current account deficit at $324m

Current account deficit down about 48 per cent compared with July’s deficit of $620 million.

KARACHI: The country’s current account deficit for the August was recorded at $324 million, down about 48 per cent compared with July’s deficit of $620 million, according to data released by State Bank of Pakistan.

However, the deficit for the first two months of the current fiscal year combined increased to $944 million, up 49 per cent when compared with the deficit for the same period last year which stood at $635 million.

As a result of the monthly improvement, the current account deficit as a percentage of gross domestic product narrowed from 3.9 per cent in July to about two per cent at the end of August.

The data shows that worker remittances increased to $933 million during August. The figure for the preceding month under the same head was $791 million. Analysts commented that Pakistanis living abroad have stepped up in terms of transfers to the country in the wake of the recent floods.

The data also showed that imports dropped to about $2.83 billion during August compared with $2.92 billion in July. “Imports of high speed diesel and furnace oil have dropped about 25 per cent between July and August,” highlighted Khurram Shehzad, Research Head at InvestCap. “This has helped bring down total imports during August.”

On the other hand, exports posted an increase from $1.66 billion in July to $1.811 billion in August. The reduction in current account deficit is being considered a positive indicator amidst the deteriorating economic condition. However, experts warn that the reduction in imports was temporarily brought about by the lower demand for diesel and furnace oil, which  is expected to resurge as flood waters subside and economic activity resumes.

Published in The Express Tribune, September 21^st, 2010.