89 percent decline in first quarter current account deficit

[Naveed Yaseen]

RECORDER REPORT
KARACHI (October 22 2009): Pakistan's current account deficit posted a decline of 89 percent in the first quarter of the current fiscal year, mainly due to higher home remittances and sharp decline in trade deficit. "Massive decrease in the current account deficit has occurred due to rising home remittances sent by overseas Pakistanis, decline in imports and trade deficit, besides aggressive performance of services sector," analysts said.

They said that month-on-month basis current account deficit had also presented a better performance, which reflects that the current account deficit would be around 2-2.5 billion dollar by the end of June 2010. Official statistics on Wednesday showed that the current account deficit had declined by 3.796 billion dollar during July-September of fiscal year 2009-10, when compared to same period of last fiscal year 2008-09.

With this decrease, the overall current account deficit has narrowed down to 462 million dollars as compared to 4.258 billion dollars of last year. Monthly current account deficit posted a surplus of 174 million dollars in September 2009 relative to 19 million dollars in August 2009.

Trade and services sector presented a significant improvement and contributed major share in narrowing current account deficit, while income deficit was witnessing upward trend. Trade deficit stood at 2.75 billion dollars in first quarter of fiscal year 2009-10 as against 4.51 billion dollars in same period of last fiscal year.

Services sector deficit declined by 42 percent during the first three months of the current fiscal year. Services sector deficit stood at 749 million dollars with 1.551 billion dollars exports and 802 million dollars imports as compared to 1.130 billion dollars with 2.39 billion dollars exports and 1.092 billion dollars imports in the corresponding period of last fiscal year.

Overall deficit including goods, services and income stood at 4.135 billion dollars against the current account transfers of 3.712 billion dollars during the July-September of fiscal year 2009-10. Overall goods imports stood at 4.635 billion dollars and exports at 5.711 billion dollars with a trade deficit of 2.7 billion dollars in first three months of the current fiscal year.

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