Current account deficit drops 48% in the first half of current financial year
KARACHI: Current account deficit narrowed down by 48.5% in the first half of current financial year (1HFY16) to stand at $1.267 billion (0.9% of GDP) as compared to similar period of last financial year, which saw a deficit of $2.46 billion, according to the State Bank of Pakistan (SBP).
The deficit in this financial year declined due to control of imports bill and inflows of foreign exchange earnings through remittances.
The balance of trade in goods and services witnessed 11% decline in the heads of balance of payment mainly due to drop in imports expenses by 11% to $10.8 billion in 1HFY16 from the same period of previous year.
Although earning through exports were also on decline by 10% to stand at $19.8 billion but service deficit showed a decline of 31% to stand a little more than $1 billion.
Remittances, on the other hand, had been witnessed continuous growth for past many years as it recorded 6.2% increased in the period of Jul-Dec 2015 to reach $9.7 billion.
SBP in its quarterly report stated that the current account benefited from the fact that price of commodities which Pakistan imports (like metals, fertilisers and palm oil) fell much steeply than the price of commodities which Pakistan exports (like rice and cotton).