Pak Current A/C Deficit Widens

Pakistan posted a glaringly high current account deficit of $2.1 billion (0.6% of GDP) in July. Even though exports were up 26% to $1.8 billion, imports were up by a massive 51% to $4.7 billion in July, according to the central bank data, APP reported. Trade deficit for the month was recorded at $2.9 billion, up 80% over last year. This high trade deficit has effectively eclipsed remittances, which were up 16% to $1.5 billion. Given the large CAD and few inflows in the financial account, the overall balance of payments have also declined by $1.5 billion, which is reflected in the ongoing decline in the country’s foreign exchange reserves. The country’s foreign exchange reserves are down to $19.9 billion (as of August 11), down 6.8% from $21.4 billion June end. While the central bank reserves have fallen by 13% to reach the year low of $14 billion as of August 11 which is three-month of import cover.