KARACHI: The current account deficit for January 2020 clocked in at $555 million as opposed to $865 million in January 2019, signifying a 36pc year-on-year decline.
However, on a month-on-month basis, the CAD witnessed an uptick of 77pc in Jan 2020, as compared with Dec 2019.
The monthly decline could be attributed to a 10pc YoY plunge in exports and 11pc decrease in imports during January.
KASB Securities Managing Director Arsalan Soomro said, “Whether it was the transporters’ strike, axle-load implementation issues, increase in power tariff for exporters or general global slowdown, this decline was not expected.”
Soomro continued, “The run-rate of CAD is still in line with IMF’s target for FY20 that shall be comfortably met. For monetary easing, exports need to grow.”
The decline suggests that the country’s economy was not ready for currency depreciation, as imports have reached its bottoming point, leaving little to no room for further compression.
There has been a 9pc increase in remittances during January 2020. “We expect further growth in remittances, despite subdued growth in developed markets over the outlook period, because of technological advances and the Pakistani authorities’ focus on remittances and digitization, which will further reduce the cost of repatriating funds,” Moody’s had said in a statement on Monday.
The CAD, as a percentage of GDP, has gone from -3.7pc in January 2019 to -2.4pc in January 2020.