Jump in services import, higher commodity prices increase Pakistan's current account deficit
Nov 20, 2021
Karachi [Pakistan], November 20 : In the wake of a spike in imports and higher international commodity prices, Pakistan's current account deficit - higher foreign expenditure compared to income - swelled to USD 5.08 billion in the first four months (July-October) of the current fiscal year.
According to the State Bank of Pakistan (SBP), the country had recorded a current account surplus of USD 1.3 billion in the corresponding period of the previous year, reported The Express Tribune.
In a report on Friday, Ismail Iqbal Securities Head of Research Fahad Rauf said that Pakistan's current account deficit expanded to the highest level since June 2021. "The number is also higher than the research house's expectation of USD 1.3 billion," he said.
In October 2021 alone, the current account deficit came in at USD 1.66 billion compared to the surplus of USD 448 million in the same month of last year.
"The financial account registered a slight outflow of USD 163 million, led by Sukuk repayment of USD 1 billion," Rauf pointed out.
In comments to The Express Tribune, Alpha Beta Core CEO Khurram Schehzad said that the current account deficit was widening because 70-80 per cent of imports consisted of necessities such as oil, food, raw material and machinery - the latter ones being imported under the Temporary Economic Refinance Facility (TERF).
He projected the full-year current account deficit in the range of USD 10-12 billion and termed it highly risky for Pakistan as the rupee would come under further pressure.
The trade deficit recorded an increase of 103 per cent in the four-month period due to higher international commodity prices, particularly crude oil prices, reported The Express Tribune.
