Current account deficit shrinks by 84 percent

[Naveed Yaseen]

KARACHI (November 20 2009): The country's current account deficit has shrunk by 84 percent to some one billion dollars in the first four months of current fiscal year mainly due to rising home remittances and sharp decline in trade deficit. The central bank on Thursday said the country has posted a current account deficit of 1.071 billion dollars in July-October of FY10 as compared to 6.657 billion dollars in the corresponding period of FY09, depicting a decline of 5.586 billion dollars.

"Massive decline in the country's current account deficit has occurred due to rising home remittances, decline in goods imports and trade deficit, besides aggressive performance of services sector," analysts said. They said current account balance was constantly facing deficit since June 2007 to January 2009 largely contributed by high goods imports on the back of rising commodity prices on international front.

However, a major cut in imports followed by slow trade activities has changed the situation and now the current account deficit is on lower side. They said trade and services sectors have shown a significant improvement and contributed major share in the depleting current account deficit, while income deficit is still witnessing an upward trend.

The country's overall goods imports stood at around 10.162 billion dollars and exports at 6.259 billion dollars with a trade deficit of 3.9 billion dollars in first four months, which previously stood at 6.397 billion dollars in the same period of last fiscal year. Services deficit has declined by 796 billion dollars or 43 percent to 1.040 billion dollars with 1.2 billion dollars exports and 2.24 billion dollars imports in July-October of current fiscal year.

The country's income deficit stood at 805 million dollars in FY10 with 165 million dollars inflows and some 972 million dollars outflows. Overall deficit including goods, services and income stood at 5.75 billion dollars against the current account transfers of 4.723 billion dollars during the first 4 months of current fiscal year. Month on month basis, current account balance has registered a deficit of 531 million dollars in October 2009.

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