Feb-2021 Current Account deficit decline to $50million

March 22, 2021

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Pakistan’s Current account deficit for the month of February-2021 decreased to $50million from $ 210 million in January 2021.

State Bank of Pakistan reported on Sunday that Current account deficit narrowed by 75 percent in February 2021 compared to February 2020. The current account deficit in February 2021 was $ 50 million, down from $ 197 million in February 2020, representing a decrease of $ 147 million.

In addition, the current account deficit in February 2021 decreased by about 76%, or $ 160 million, compared to January 2021, with the deficit reaching $ 210 million.

Overall, the current account remained in surplus of US $ 881 million during the first eight months of this fiscal year (fiscal 21), compared to US $ 2.74 billion in the same period last fiscal year.

Continued strong growth in Foreign remittances and a robust recovery in exports since November-2020, compared to the same period last year, are supporting the current account surplus, according to SBP, more than offsetting increased imports due to domestic food shortages and recovery in Economic activities.

As the economy recovers, the trade deficit widens due to imports of capital goods and industrial materials, as well as food, as well as rising global commodity prices.

State Bank of Pakistan expects the current account deficit to remain below 1% of GDP in the fiscal year 2021, supported by a robust outlook for foreign remittances and export recovery, especially in value-added textiles.

Analysts are of the view that the main reason for the improvement in the current account was the increase in total exports and the significant inflow of remittances during this fiscal year.

Foreign Remittances sent by overseas Pakistanis have remained consistently at over $ 2 billion for the past nine months. They said the export recovery would also bolster the external account.