Daily Times

KARACHI: Pakistan continues to face balance of payment crisis as the country recorded historic high current account deficit of $14 billion during the 10 months of current fiscal year mainly due to widening of trade and services account deficits. The current account deficit of the country has increased to 5.3 percent of the GDP.

According to statistics issued by State Bank of Pakistan (SBP), Pakistan imported goods worth $45.6 billion while services worth $8.53 billion as compared to exports of goods worth 20.6 billion and services worth $4.13 billion during the period July 2017-April 2018 period of the current fiscal year.

Pakistan has set $23.09 billion exports target for FY2018. The exports during July- Apr FY2018 have reached $20.6 billion and government of Pakistan is confident to achieve the target by year end. The export growth can be attributed to a number of initiatives, announced by the government including export package of Rs 180 billion, improvement in the energy supply (import of LNG) and significant recovery in the global commodity prices. Pakistan also devalued its currency by 10 percent to encourage exports.

Meanwhile the government remained under pressure to counter burgeoning imports that mainly comprises machinery for production purpose. Meanwhile Pakistan’s import increased to $54 billion during the 10 months of current fiscal year FY18 including $8.5 billion worth of services imported. The imports during the same period of last fiscal years were recorded at $46.9 billion, SBP data shows.

Pakistan imports from countries like China, Saud Arabia, UAE, and Indonesia constitutes more than 50 percent of the total imports. During current fiscal year imports from China has decreased from 32 percent in last fiscal year to 25 percent during July-January 2017-18. However from U.A.E, has fallen by 2 percent during July-January 2017-18 as compared to same period last year, according to Pakistan Economic Survey 2018.

Meanwhile, a welcome rebound was noted in workers’ remittances during the period under review as the workers’ remittances showed encouraging sign by increasing to $16.2 billion against $15.6 billion recorded during the same period of last fiscal year.

The foreign investment witnessed slightly upsurge, driven mostly by significant Chinese investment under CPEC which increased to $2.2 billion during the current 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 call for measures to enhance country’s exports by redrawing trade policy.

Published in Daily Times, May 19^th 2018.