Current Account Deficit down 79 percent YoY in August 2023

September 18, 2023

In August 2023, the Current Account Deficit (CAD) amounted to USD 160 million, marking a substantial 79% year-on-year (YoY) decrease from the previous year when the CAD reached USD 774 million.

The YoY decline was primarily attributed to a 24% decrease in total imports. However, exports and remittances also witnessed declines of 9% and 24% YoY, respectively.

On a month-on-month (MoM) basis, there was a slowdown in overall imports, with only a 1% increase recorded in August 2023. In contrast, total exports saw a robust 14% MoM surge, and remittances also increased by 3% MoM.

During the first two months of FY24 (2MFY24), the CAD decreased by 54% YoY to USD 935 million, in stark contrast to the deficit of USD 2,035 million recorded during the same period in the previous year. Total imports (goods and services) in August 2023 increased by a marginal 1% compared to the previous month, totaling USD 5.1 billion. However, the YoY comparison for August 2023 revealed a 24% decline in total imports compared to the same month in FY23.

In August 2023, there was a significant 28% YoY decrease in the import of goods. Nevertheless, when assessed on a MoM basis, there was a modest 2% increase in goods imports. The import of services in August 2023 showed a YoY growth of 9%, but on a MoM basis, there was a slight decline of 2% in services imports. Over 2MFY24, total imports registered a YoY decline of 21% to USD 10.1 billion.

The breakdown of imports during 2MFY24 by category includes the Petroleum group (USD 1.9 billion), food group (USD 1.2 billion), machinery group (USD 950 million), and agriculture & other chemicals (USD 1.5 billion).

In terms of exports, total exports (goods and services) in August 2023 saw a significant 14% increase compared to the previous month, amounting to USD 3.0 billion, up from USD 2.7 billion in the previous month. However, on a YoY basis, total exports in August 2023 declined by 9% compared to the same period in the previous year when it was USD 3.3 billion.

The export of goods in August 2023 experienced an 11% YoY decline. Conversely, there was a substantial 14% MoM increase in goods exports during the same period. The export of services saw a 2% YoY increase in August 2023 and a 12% MoM increase in services exports during the same month. Over 2MFY24, total exports registered a YoY decline of 6% to USD 5.7 billion.

In August 2023, monthly technology exports increased by +3% YoY and +10% MoM to USD 235 million. Over 2MFY24, technology exports amounted to USD 449 million, contributing 40% to the overall services’ exports and marking a 5% YoY increase.

Regarding remittances, overseas Pakistanis sent USD 2.1 billion in August 2023, reflecting a 3% MoM increase from USD 2.0 billion in July 2023. However, on a YoY basis, remittances decreased by 24% (August 2022: USD 2.7 billion). Over 2MFY24, remittances declined by 22% YoY to USD 4.1 billion compared to USD 5.3 billion in 2MFY23.

Foreign Direct Investment (FDI) saw net inflows of USD 146 million in August 2023, marking a 15% YoY increase and a substantial 67% MoM increase from the USD 127 million net inflow recorded in August 2022. Over 2MFY24, net FDI increased by 16% YoY to USD 234 million, compared to an inflow of USD 201 million in 2MFY23.