Current account deficit nearly doubles in July-Sept

KARACHI: The current account deficit surged to $1.368 billion during the first quarter of the current fiscal year of 2016/17, almost doubled from $579 million in the same period of the last fiscal year, the central bank’s data showed on Thursday.   

The July-September deficit registered a year-on-year increase of nearly 100 percent from the corresponding quarter of 2015/16 due to fall in remittance from overseas Pakistan, low foreign direct investment and surge in trade deficit.  

The current account deficit stood at 1.7 percent of gross domestic product in July-September FY17. However, the county’s current account gap narrowed to $161 million in September against $612 million in the previous month as improvement in trade goods and services’ balance provided relief to the balance of payment position during the month under review.    

Analysts said the latest figures underscored a pressure on the balance of payments.    “A slowdown in remittances from the Gulf countries, low exports and uptrend in oil prices would create serious problems for the economy to cover balance of payments’ shortfall,” an analyst said. Workers’ remittances fell to $4.698 billion in July-September quarter of the current fiscal year of 2016/17, compared with $4.965 billion a year earlier.  The trade deficit surged to $7.049 billion against $5.468 billion a year ago.  

Pakistan’s exports fell to $4.676 billion in July-September FY17 period from $5.143 billion in the corresponding period of 2015/16. Imports increased to $11.725 billion against $10.611 billion a year earlier. A slid in foreign direct investment also affected the balance of payments statement because the FDI inflows have significant impact on the volume of import and export of a country.

Foreign direct investment into Pakistan fell to $249.3 million during the first quarter of 2016/17 against $403.3 million in the same quarter of last fiscal year.   The country posted a wider deficit of $6.078 billion in the trade of goods and services in July-September FY17 compared with a $5.112 billion shortfall in same period last year.