According to central bank data released on Wednesday, Pakistan’s current account balance continued to remain in surplus for the second consecutive month at $297 million in August as inflows of foreign currencies were higher than outflows.
“The surplus corresponds to consumer expectations. It was accomplished after a period of nine years for the second consecutive month. Last time, it took place in March-April 2011, Samiullah Tariq, Head of Research and Development of Pakistan Kuwait Investment Company (PKIC) said.
However, the surplus balance came at the expense of economic growth as the imports and exports of the country remained sluggish, mainly due to the decline in demand for goods and services in the domestic and international markets in the light of the global health crisis of Covid-19.
“The current account balance will be back into deficit as soon as imports increase…with the improvement in Covid-19 situation in the US and Europe and reopening of global markets,” Tariq added.
Around 60% of imports consist of raw materials, which are mainly used by the country’s export industry.
The second wave of the pandemic is now being fought by the US and Europe. It may take three to six months for the situation there to become apparent.
In the first two months of the current fiscal year, the accumulated current account surplus was reported at $805 million.
In August last year, the current account reported a deficit of $601 million. On a cumulative basis, the State Bank of Pakistan (SBP) announced a deficit of $1.21 billion in the first two months of the previous fiscal year.
In the first two months of FY21, exports of goods dropped almost 17 percent to $3.42 billion, compared to $4.10 billion in the same period of the previous year. Goods imports fell almost 13 percent to $6.73 billion compared to last year’s $7.70 billion.
SBP announced that service exports decreased to $758 million, compared to $884 million last year. Service imports decreased in July-August FY21 to $1.22 billion, compared to $1.82 billion in the same period last year.