KARACHI: The current account deficit in the first eight months of 2017-18 amounted to $10.8 billion, up 50 per cent from a year ago.
According to data released by the State Bank of Pakistan (SBP) on Tuesday, the gap was $1.24 billion in February, down by 25 per cent over the preceding month.
Current account tracks a country’s overseas transactions, such as net trade, earnings on cross-border investments and transfer payments.
The widening deficit in Pakistan’s current account balance is reflective of growing difficulties on the external front of the economy. It widened to $7.4 billion in the first half of the fiscal year, up 1.6 times the gap registered a year ago.
Exports of goods amounted to $15.9 billion in July-February, up 12.2 per cent from a year ago. But the corresponding rise in imports, which were worth $35.6 billion, remained 15.9 per cent over the same period. This shows imports are growing at a faster pace than exports, further widening the gap between inflows and outflows. Workers’ remittances rose 3.4 per cent to $12.8 billion at the end of the eight-month period.
The sudden depreciation of the rupee against dollar to Rs114 on Tuesday is likely to help bridge the trade gap. The move will curtail imports as they will cost more because of the change in the value of the local currency. Similarly, exports are expected to witness a spike in nominal terms because of the devaluation.