Current account deficit in January at record high of $2.55 billion

The Current Account Deficit increased to $11.579 billion in the seven month of current financial year, against a surplus of $1.028 billion in the same period last year

In January, Pakistan’s current account deficit reached at record high of $2.55 billion. It is an increase of 37.73% compare to December 2021. In December, current account deficit was $ 1.86 billion. The current account deficit increased to $11.579 billion in the seven month of this fiscal year, against a surplus of $1.028 billion in the same period last year.

Analysts said an all-time high current account deficit highlighted the country’s reliance on foreign financing and the risk of more pressure on already battered rupee. The surging imports continue to widen the trade deficit as the prices of oil and other commodities including food continue to rise.

 The Russian invasion of Ukraine is likely to further push the prices of oil and wheat. The oil prices already crossed $103/barrel on Ukraine crisis.

The trade deficit, a key component of the current account deficit, jumped 92.45 % to $28.87 billion in July-January financial year 2022. The poor performance in seven months was a result of higher imports, which rose quicker than exports due to domestic economic recovery from the pandemic and higher global commodity prices.

Imports of goods jumped 55.1% to $42.843 billion in July-January FY2022, the State Bank of Pakistan’s numbers showed. Exports increased 27.4% to $17.772 billion.

On year-on-year basis, the primary reason behind the deficit was a 45% increase in total imports to $7.3 billion and 5% decline in remittances. Analysts fear the current account deficit could rise further in coming months on account of higher global commodity prices, especially triggered by Russian military aggression against Ukraine. “Based on this trend it will beat all earlier estimates and may go to $16-18 billion (5-6% of GDP) looking at rising oil prices.

                                                                        Web Desk

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