The current account deficit for the month of January 2021 was reduced by 65% to $229 million as compared to the value of $652 million recorded in December 2020.
On the month on month basis, it was reduced due to healthy inflows of remittances with high export receipts. A decline in total imports was also seen during the above-mentioned period.
Resulting, the overall current account stood at a handsome surplus of $912 million in the period of July to January 2020. The current account reflected a much better situation when it comes to the value of the same month of last year in which the deficit stood at $2.54 billion as per statistics of the State Bank of Pakistan.
1/2 In Jan21, current account deficit reduced to $229mn from $652mn last month. For first 7 months of FY21, current account surplus is $912mn, a significant turnaround from the deficit of $2,544mn during same period last year. For details, see: https://t.co/Od8ikVdOd5
— SBP (@StateBank_Pak) February 22, 2021
In January 2021, exports grew steadily while remittances continued their record expansion. Imports of wheat and sugar to address domestic shortages, and palm oil, were significantly higher. Machinery imports continued to grow at double-digits, reflecting a gradual economic recovery, SBP commented.
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities told ProPakistani,
The current account deficit should increase going forward given the opening up of the economy and resultant demand from consumer, machinery and food imports.
The trade deficit of goods and services was reduced to $1.115 billion during July-January as compared to $1.89 billion recorded in the corresponding period of the last year. The consistent growth of textile products and IT services supported the overall exports to maintain their steady growth over the period of seven months in the current financial year.
On the other hand, remittances continued to provide support to the current account with handsome inflows of $16.48 billion.