Pakistan records 5th consecutive monthly current account surplus in FY21
Based on the data released by the SBP, Pakistan’s external account recorded its 5th consecutive monthly surplus, registering at USD 447mn during Nov20 against a deficit of USD 326mn in Nov19. Despite an 18% Y/Y increase in the trade deficit to USD 1,850mn during the month, a sharp 28% Y/Y increase in worker’s remittances to USD 2,339mn allowed for the surplus reading.
Cumulatively, the current account balance registered at USD 1,640mn during 5MFY21 against a deficit of USD 1,745mn during 5MFY20. The cumulative trend followed a similar trajectory to monthly figures with the 7% increase in trade deficit being offset by the 27% increase in worker’s remittances.
Going forward, higher oil prices coupled with recovering economic activity will likely push imports during the 2H of FY21. Exports are also expected to find support from the textile sector, which is presently operating near its peak capacity on account of a surge in orders. With the trend of remittances expected to cool off from present elevated levels, we foresee Pakistan’s external accounts to record a CA deficit of USD 2.5bn (0.9% of GDP) during FY21.