Pakistan’s current account deficit narrows in July as exports rebound

While the services sector also ran a deficit, with exports of $927 million against imports of $1.16 billion, despite the narrower headline deficit, the trade picture remained under pressure: the goods trade deficit widened to $3.15 billion in July from $2.68 billion a year earlier.

Separately, the State Bank reported that Pakistan’s Real Effective Exchange Rate. It measures the rupee’s value against a basket of major trading partners’ currencies, rose to 107.92 in July from 106.33 in June.

Pakistan’s external accounts have been a persistent source of strain for the South Asian nation of roughly 240 million people. It has repeatedly sought backing from the International Monetary Fund and bilateral lenders including China, Saudi Arabia and the United Arab Emirates to avoid balance-of-payments crises.

The details

In the eight months from July through February of the prior fiscal year, Pakistan had posted a current account deficit of $700 million, reversing a $479 million surplus in the same period a year earlier, a deterioration that analysts attributed to persistent structural weaknesses in the country’s trade balance.

Economists say the widening gap between imports and exports remains the central challenge facing Pakistani policymakers, even as remittance inflows and periodic export gains have offered intermittent relief to the external account.