In December, Pakistan recorded a current account surplus of $397 million, marking a reversal from six consecutive months of deficits. Central bank data indicated that increased exports, rising remittances, and a decline in imports contributed to narrowing the trade gap.
This surplus, the first since June 2023, contrasts with deficits of $15 million in November and $365 million in December 2022. Factors such as heightened demand for Pakistani goods, higher remittances, and reduced imports due to various economic factors and administrative measures contributed to the turnaround.
The country’s overall exports rose by 21%, totaling $2.799 billion in December, while total imports decreased by 4% to $4.092 billion. Remittances increased by 13% to $2.381 billion during the same period.
The positive trend in export earnings suggests recovery in the apparel and textile industries, aided by increased IT exports and stable currency. Despite external repayments covered for the year, challenges persist in attracting enough foreign exchange to support demand.
The IMF anticipates Pakistan’s gross reserves to be $9.1 billion by June 2024, with a lowered projection for the current account deficit in FY24. Analysts estimate the deficit to be between $4 and $5.5 billion. The government aims to roll over $12.4 billion amidst ongoing economic challenges.
