According to the State Bank of Pakistan (SBP), Pakistan’s current account deficit shrank to $1.113 billion in September from $1.473 billion in August.
In September 2020, the current account balance was $30 million in surplus. On a monthly basis, however, the deficit has shrunk by roughly 24 percent, thanks to an improvement in the trade balance.
According to the Central Bank, “A strong rebound in economic activity and higher international commodity prices kept the current account deficit at an elevated level of $3.4 billion in Q1-FY22 (July-September).”
The current account balance is a crucial metric for Pakistan, whose currency has been under severe pressure in recent months. Since May 2021, the rupee has lost approximately 12% versus the US dollar, a loss that coincides with a hefty import bill, a worsening current account deficit, and concern over the Afghan scenario.
According to revised SBP estimates, the current account deficit was $1.92 billion in FY21 and has increased significantly in recent months.
While the gap remains wide, it has shrunk in September, thanks to a decrease in the balance of trade deficit from $3.986 billion in August to $3.551 billion in September.
In September, Pakistan’s imports of goods totaled more than $6.076 billion, with services accounting for another $668 million. In September, goods exports totaled $2.64 billion, with services contributing another $551 million.
Experts believe that, due to increasing commodity costs on international markets, the import bill will likely remain high in the coming months.
Despite Beijing’s efforts to boost supply, oil prices have already risen to roughly $84-86 per barrel, while China coal prices touched a record high on Tuesday, boosted by a worsening power shortage and cold weather.
