In September 2023, Pakistan experienced a significant improvement in its economic situation, with the current account deficit plummeting to just $8 million. This marked a remarkable 95% reduction compared to the previous month’s revised deficit of $164 million and a 98% drop compared to the same month in the previous year.
This impressive turnaround can be attributed to a combination of factors. Notably, the country’s total exports in September reached $3 billion, showing a 1% increase both month-on-month and year-on-year. In contrast, imports decreased by 6% compared to the previous month and 14% compared to the previous year, contributing to the reduction in the current account deficit. Additionally, remittances from overseas Pakistanis rose to $2.2 billion, increasing by 5% from the previous month, though they were down 11% compared to the same month in the previous fiscal year.
Analysts predict that these positive trends, driven by higher remittances and lower imports, may continue, potentially leading to a current account surplus in the near future. The country’s economic resilience, driven by these factors and a market-determined exchange rate, has significantly improved its external balance and reduced the current account deficit to just 0.7% of GDP in FY23, compared to 4.7% in the previous year. This bodes well for Pakistan’s economic stability in the coming fiscal year, with a predicted range of 0.5-1.5% of GDP for the current account deficit in FY24.