Daily Times

KARACHI: Pakistan’s current account deficit has widened by whopping 160 percent in nine months of current fiscal year 2016-17 thanks to increasing import bills of goods and services, and declining inflows of foreign exchange from exports receipts and workers’ remittances.

According to statistics released by State Bank of Pakistan (SBP) here on Wednesday, the current account deficit has widened to $6.1 billion in the period of July 2016 to March 2017 as compared to $2.3 billion deficit recorded during the same period of the last fiscal year – 9MFY16.

The current account deficit rose to 2.6% of the Gross Domestic Product GDP in the nine months of 2016-17 as opposed to 1.1% in the same period of last fiscal year, the data shows.

During the last nine months of current fiscal year, exports decline by 1.3 percent to $16 billion against $16 billion worth of goods exported from Pakistan in the same period last year. The data shows that the imports increased by 14 percent during the same period to $33.8 billion. Thus the balance of trade in goods was recorded at $17.7 billion.

The services sector’s exports increased during the current fiscal year to $4.3 billion, while imports stood at $6.2 billion. Services sector’s deficit in the current year improved to $1.9 billion against $2 billion of the last fiscal. The accumulated balance of goods and services increased by 28 percent to $19.7 billion as compared to $15.3 billion of the same period last year.

The workers’ remittances also suffered by 2.2 percent to $14 billion from $14.3 billion sent by overseas Pakistanis last year.

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.

Keeping in view the swelling current account deficit, experts have called for reviewing country’s trade policy. “Exports from Pakistan are continuously declining causing major dent to the national economy. Pakistan external position was not that much worst as it is now mainly due to falling exports, remittances and increasing cost of production at home”, commented senior economist Dr Shahid Hassan Siddqui.

Dr Siddiqui foresees that the country, if failed to improve its exports, will be in serious crisis in the coming years. “We have artificially overvalued our currency that should be around Rs 110-112 per dollar,” he suggested.

Economists also suggest restricting the imports of goods that are already being produced in the country and the decision should be made in the trade policy rather than in budgets.