Daily Times

KARACHI: Rising import bill and disappointing export performance continue to bleed Pakistan financially at external front as the country’s current account deficit swelled to $2.091 billion in the first month of the current fiscal year, FY18, against $667 million of the same period of last fiscal year FY17.

The current account deficit increased to 7.2 percent of Gross Domestic Product GDP against 2.6 percent.

Despite incentives and tall claims of reversing export trend a negligible growth was recorded which increased from last year’s $1.4 billion, country had to suffer in the month of July 2017, to $1.8 billion. The daunting task of arresting the declining export was main target of Pakistan’s economic managers who failed to achieve their target.

During the outgoing year FY17 the export sector contributed to increasing current account deficit which rose by 60 percent. The current deficit in FY17 was 4% of the Gross Domestic Product GDP as opposed to 1.7% recorded in the same period of last fiscal year, SBP data shows.

During FY 17, the exports declined to $21.6 billion against the growth of $21.9 billion worth of goods exported from Pakistan. Meanwhile the imports increased to $48.5 billion as compared to $41.2 billion of fiscal year FY16. Thus the trade deficit was recorded at $26.8 billion.

The imports during the July 2017 increased to $4.6 billion against $3.11 billion, with import of services showing increase to $893 million as compared to $694 million. The two sectors, transport and travel, attracted $383 million and $228 million respectively in July 2017.

Remittances play important role in supporting external position of the country. During last couple of years external factors including financial condition of middle-eastern countries have negatively impacted the flow of remittances.

However, during the first month of current fiscal year the exports depicted positive growth for the country as remittances increased to $1.5 billion from $1.3 billion of the last fiscal year, a encouraging sign for the country which relies on remittances to large extent.

The current account, broadest measure of trade, covers flows of goods, services and investment. The current account is an important indicator of economy’s health.

Published in Daily Times, August 22^nd 2017.