Ministry expects $1bln current account deficit in the coming months

ISLAMABAD, April 29: : The current account deficit (CAD) is expected to stay around $1 billion in the coming months amid a rising trend in imports of goods and services due to the rise in international commodities prices.

According to the monthly outlook of April 2022 released by the Ministry of Finance, remittances may surge on account of the Eidul-Fitr and Ramazan in April 2022.

During the first nine months (July-March) of the current fiscal year 2021-22, the current account posted a deficit of $13.2 billion as against $275 million last year on the back of the constantly growing import volume of energy and nonenergy commodities, along with a rising trend in the global prices of oil, Covid-19 vaccines, food, and metals.

On the other hand, exports of goods and services expressed in USD are on an increasing trend since mid2020. This followed the reopening of domestic and external economies after the COVID-19 induced lockdowns. With the further domestic and international relaxing of protective measures against the pandemic, Pakistan's exports benefited from a largely depreciated Nominal Effective Exchange Rate. It compensated for the differential between Pakistan's inflation and the inflation in its main trading partners.

The domestic and international scenarios are changing which carries implications for the economic recovery, it said. With regards to inflation, the report noted that YoY headline inflation for the month of April is expected to remain within a range of 11.5 to 12.5 percent. - NNI