Karachi, May 17, 2023 (PPI-OT): Pakistan Economy: Current Account Surplus, but at a cost

Pakistan posted a Current Account Surplus for the month of Apr’23 to the tune of US$18mn, compared to the revised US$750mn reported for the earlier month. The reduction in the Current Account Surplus for the month is largely attributable to the fall in remittances during the month, which clocked in at US$2.2bn in Apr’23, lower by 12.8%MoM.

The situation was worsened by an increase in the Trade Deficit, from US$1.6bn in the earlier month to US$1.8bn in Apr’23. This was largely driven by a US$450mn sequential drop in exports, offset by a US$252mn drop in imports of Goods and Services.

Foreign Direct Investment in the country has dropped to US$121.6mn in Apr’23, compared to US$163.4mn in the earlier month and US$170.6mn in the SPLY. A large chunk of FDI during the month was attracted from China, to the tune of US$28.5mn, higher by 1.3xMoM.

Current Account Surplus in the last two months has come at a cost to the country, as imports of essential raw materials have been curbed. Industrial output of the country has been negatively affected. Opening up of the economy could lead to further weakness in the PkR. Hence, we continue to advocate for US$-denominated sectors, i.e. Technology and E and Ps.