KARACHI: The current account deficit nearly trebled to $915 million in the October-December quarter from $351m in July-September, defying experts’ predictions.
This means the current account was in deficit of $1.267 billion in the first half of the fiscal year despite higher inflows and fall in trade gap. However, the amount was significantly lower than $2.4bn deficit in the first half of the preceding fiscal year.
According to the State Bank of Pakistan (SBP) data released on Wednesday, exports fell sharply to $10.82bn during July-December compared to $12.16bn in the same period a year ago.
The falling exports remained a source of concern for the government as exporters have failed to improve their performance despite prevailing low interest rate of six per cent and rupee’s devaluation of over four per cent against the US dollar.
Exporters argue that the global market is sluggish for their products while supply of cheaper goods from China and India is also making Pakistan’s exports costly and uncompetitive.
Imports also fell by $2.1bn during the six-month period under review, but the drop was less than the expectations of a $3.5bn decline.
Record foreign exchange reserves at $21bn and a consistent month-on-month rise in remittances have also failed to limit the widening current account deficit. Though the deficit was less than the year-ago period, its very existence is concerning for the government and experts.
Currency experts said the deficit shows that the country is not able to protect the local currency, which has already dropped by 4pc during this fiscal year.