They believe that current account deficit will remain the toughest challenge for the economic managers of the newly-elected PTI government. The State Bank of Pakistan Monday reported that the CA deficit rose by 14 percent or $268 million to $2.2 billion in July 2018 up from $1.93 billion in the same period of last fiscal year.
Economists said the SBP has already mentioned in its recent report that ensuring the continuity of expansion in economic activities and low inflation would depend on containing of current account and fiscal deficits. Therefore, the newly-elected government will be required to take some concrete measures to contain the widening current account deficit and increase the foreign inflows, they added.
Cumulative deficit of trade, services and income stood at $4.447 billion in the first month of current fiscal year against $3.688 billion in the same period of last fiscal year, depicting an increase of $759 million. The details show that the goods'' export growth is almost 50 percent less than imports. Exports of goods increased by 10 percent or $188 million to $2 billion, while the imports jumped by 20 percent or $922 million to $5.56 billion in July 2018.
During the period under review, services sector deficit rose by 19 percent to $498 million with $405 million exports and $903 million imports. Similarly, income sector outflows stood at $445 million against $54 million inflows, depicting a deficit of $392 million during the first month of FY18.
The country''s foreign exchange reserves are also gradually depleting due to rising current account deficit and limited financial inflows. Pakistan''s foreign exchange reserves stood at $16.713 billion in the second week of this month.
The external account remained under pressure during the last fiscal year, despite a recovery in exports and remittances. A rebound in global oil prices, together with higher machinery and transport import, exacerbated the trade deficit that led to the highest current account deficit of $18 billion in FY18.