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Current account records $146m surplus in Feb - LahoreEstate - 03-19-2009 09:54 AM
KARACHI: After a prolonged period of deficits, the country recorded a current account surplus in February which helped reduce the ever widening current account deficit.
The State Bank on Wednesday reported current account surplus of $146 million in February against January when the country recorded a current account deficit of $279 million.
The improvement in the balance of payment was the direct impact of higher exports and lower imports while inflows of dollar remained constant.
Trade balance is the key for current account balance or imbalance in the country.
The overall current account deficit during the first eight months (July-Feb) of the current fiscal reached $7.455 billion against $8.645 billion in the corresponding period of last year.
The calculation shows that the current account deficits fell by 14 per cent during these eight months which is highly encouraging for economic managers.
‘The current account surplus is a good achievement and is very significant when the developed and developing countries have entered into a trade war,’ said Abid Saleem, an analyst.
The global recession, which was an outcome of the financial system meltdown, has badly hit economic growth forcing both the developed and developing countries to adopt protectionist policies by putting restrictions on free trade.
A textile trader said Pakistan’s exports have adopted a low profit policy that has minimum resistance as cheaper products are being supplied to the economies of Europe and US.
The State Bank reported the eight month trade deficit at $8.863 billion compared to $9.294 billion during the same period last year.
The export recorded an increase of 4.2 per cent to $13.015 billion compared to $12.482 billion during the same period last year.
A brokerage house analyst said the surplus current account in February was a healthy sign, but it cannot change the situation which is burdened with a huge imbalance of $7.455 billion.
‘The major impact of surplus in February was the lower import that reflects the slowdown of economic growth as our economic activities even for exports have deep relation with imports,’ said the brokerage house analyst.
The economic growth could be even less than 50 per cent of what was achieved during previous fiscal year.
Though the government still expects an economic growth rate of plus three per cent against 5.8 per cent of last year, many economists believe that this year’s growth rate could be around just two per cent.
The main impact on the economy has come from the massive cut in the development plans by the government and mostly related to infrastructure development projects.
These projects generate a vast level of economic activities and create jobs which further help the economy when consumer consumption levels increase.
Analysts were of the view that the country could face a tough time in the coming months as recession has strongly gripped the developed economies.
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