Current Account Deficit mounts to USD 1.55bn in 4MFY12 – Alfalah Securities Limited

Karachi, November 21, 2011 (PPI): Pakistan’s Current Account deficit has reached to a level of USD 1.55 bn during the 4MFY12 as compared to USD 541 mn in the same period last year, witnessing a significant increase of 186.5% YoY.

According to Alfalah Securities, the current account deficit has widened sharply despite of a 24% growth in foreign inflows from the home and worker’s remittances and poses an alarming situation for the country on the external front. State Bank has reported that Pakistan’s current account as a percentage of the Gross Domestic Product (GDP) has reached to 2% in 4MFY12 against 0.8% in the corresponding period last year. The trade deficit of the country has also increased by 31.35% to USD 6.87 bn in 4MFY12 against USD 5.23 bn in 4MFY11 and is expected to increase further due to a lower demand of Pakistani exports owing to global recession and the continuous increase in import bill.

Meanwhile on MoM basis, the current account deficit of the country witnessed an improvement of 79%, as it stood at USD 220 mn in October 2011 against September 2011 however, the cumulative four month figures are still not promising for the economy. Hence, the government is required to attract considerable foreign investments in order to reduce the deficit while, the exporting sectors are required to take the benefit of a 150 bps rate cut and increase the exports of the country.