Remittances Offset Trade Deficit as Current Account Shows Surplus

According to the latest economic report of the State Bank of Pakistan, the country’s current account recorded a surplus of $459 million in the month of May, indicating a partial improvement in the external accounts.

The report states that during the same month, Pakistan’s imports remained at $5.6 billion while exports remained limited to $2.3 billion, resulting in a trade deficit of $3.3 billion.

Although the trade deficit persists, the main reason for the improvement in the current account is the increase in remittances. Remittances of $4.2 billion were received from overseas Pakistanis in May, which play an important role in supporting the country’s foreign exchange flow.

According to the central bank, the current account had a total surplus of $255 million during the first 11 months of the current fiscal year. The trade deficit reached $24.3 billion during the same period.

According to the data, in 11 months, Pakistan imported $54 billion while exports remained at $29.75 billion, which shows that the country’s trade balance is still in favor of imports.

Nevertheless, the continuous increase in remittances has emerged as a key factor in the stability of the external accounts. Total remittances during the 11 months have reached $38 billion.

According to economists, the surplus in the current account is definitely a positive signal, but its continuation may be limited unless there is a significant improvement in the export sector and import dependence is reduced.

Experts also say that remittances are a strong support for Pakistan’s economy, but for long-term stability, an increase in productivity and exports is a basic requirement.

The State Bank says that the situation of the external accounts in the coming months will depend on global trade conditions, export performance and remittance trends.