1HFY15: Current account deficit stands at $2.36b
Widens $361m compared to same period previous year; December figures show balance surplus.
As a percentage of the Gross Domestic Product (GDP), the current account deficit stood at 1.6% in July-December, showing no change over the same period of the last fiscal year. CREATIVE COMMONS
KARACHI:
Pakistan’s current account deficit in the first six months of 2014-15 remained $2.36 billion, according to data released by the State Bank of Pakistan (SBP) on Friday.
The current account deficit widened $361 million in July-December compared to the same six-month period of the preceding fiscal year when it was $2 billion.
A deficit or surplus reflects whether a country is a net borrower or lender of capital with respect to the rest of the world.
As a percentage of the Gross Domestic Product (GDP), the current account deficit stood at 1.6% in July-December, showing no change over the same period of the last fiscal year.
In December alone, the current account balance was in surplus. It amounted to $76 million as opposed to a current account deficit of $568 million in November.
Increasing imports and decreasing exports have widened Pakistan’s current account deficit during the first half of 2014-15. Pakistan exported goods worth over $12.2 billion in July-December 2014-15, as opposed to exports of goods totalling $12.4 billion in the comparable months of 2013-14, reflecting a year-on-year decrease of almost 2%.
The value of goods exported in December increased by $425 million on a month-on-month basis to $2.3 billion, which is 22.7% higher than the exports of $1.87 billion recorded in November.
Pakistan’s total imports of goods in July-December were $21.9 billion as opposed to $21.1 billion in the comparable period of 2013-14, which means an annual increase of 4.2%.
On a month-on-month basis, however, the value of goods imported increased to $3.3 billion. From imports of goods valuing $3.09 billion in November, the month-on-month increase remained 9.5% in December.
Total oil imports constitute 36% of Pakistan’s total import bill. According to Topline Securities, a 30% decline in oil prices is likely to result in annual savings of $4 billion or 1.5% of GDP. As a result, Pakistan is likely to witness current account surplus in 2015-16, it says.
The balance of trade in both goods and services at the end of the first six months of 2014-15 clocked up at a deficit of $10.9 billion as opposed to $10.1 billion recorded in the same period of the preceding fiscal year.
Workers’ remittances remained almost $9 billion in July-December, up 15.27% from the same six months of the last fiscal year when they totalled $7.8 billion. Workers’ remittances in December clocked up at $1.58 billion, registering an increase of almost 19.8% on a month-on-month basis.
The country’s balance of payment position weakened in 2013-14, as foreign exchange reserves held by the central bank decreased to only $2.8 billion in February.
But SBP-held reserves improved following alleged intervention from policymakers into the foreign exchange market, resulting in a year-on-year increase of more than 50% by the end of the fiscal year in June. SBP-held reserves currently stand at $10.3 billion.
Published in The Express Tribune, January 17th, 2015.
Pakistan’s current account deficit in the first six months of 2014-15 remained $2.36 billion, according to data released by the State Bank of Pakistan (SBP) on Friday.
The current account deficit widened $361 million in July-December compared to the same six-month period of the preceding fiscal year when it was $2 billion.
A deficit or surplus reflects whether a country is a net borrower or lender of capital with respect to the rest of the world.
As a percentage of the Gross Domestic Product (GDP), the current account deficit stood at 1.6% in July-December, showing no change over the same period of the last fiscal year.
In December alone, the current account balance was in surplus. It amounted to $76 million as opposed to a current account deficit of $568 million in November.
Increasing imports and decreasing exports have widened Pakistan’s current account deficit during the first half of 2014-15. Pakistan exported goods worth over $12.2 billion in July-December 2014-15, as opposed to exports of goods totalling $12.4 billion in the comparable months of 2013-14, reflecting a year-on-year decrease of almost 2%.
The value of goods exported in December increased by $425 million on a month-on-month basis to $2.3 billion, which is 22.7% higher than the exports of $1.87 billion recorded in November.
Pakistan’s total imports of goods in July-December were $21.9 billion as opposed to $21.1 billion in the comparable period of 2013-14, which means an annual increase of 4.2%.
On a month-on-month basis, however, the value of goods imported increased to $3.3 billion. From imports of goods valuing $3.09 billion in November, the month-on-month increase remained 9.5% in December.
Total oil imports constitute 36% of Pakistan’s total import bill. According to Topline Securities, a 30% decline in oil prices is likely to result in annual savings of $4 billion or 1.5% of GDP. As a result, Pakistan is likely to witness current account surplus in 2015-16, it says.
The balance of trade in both goods and services at the end of the first six months of 2014-15 clocked up at a deficit of $10.9 billion as opposed to $10.1 billion recorded in the same period of the preceding fiscal year.
Workers’ remittances remained almost $9 billion in July-December, up 15.27% from the same six months of the last fiscal year when they totalled $7.8 billion. Workers’ remittances in December clocked up at $1.58 billion, registering an increase of almost 19.8% on a month-on-month basis.
The country’s balance of payment position weakened in 2013-14, as foreign exchange reserves held by the central bank decreased to only $2.8 billion in February.
But SBP-held reserves improved following alleged intervention from policymakers into the foreign exchange market, resulting in a year-on-year increase of more than 50% by the end of the fiscal year in June. SBP-held reserves currently stand at $10.3 billion.
Published in The Express Tribune, January 17th, 2015.