KARACHI: Pakistan posted a Current Account surplus of USD 255mn for the month of May’23 compared to a deficit of USD 1,506mn during May’22. This is the third consecutive monthly Current Account surplus posted by the country.
On a YoY basis, the primary reason behind the surplus was a 30% YoY decline in total imports along with a 6% YoY increase in exports. However, remittances decreased by 10% YoY during the month.
Imports
Total imports (goods and services) for the month of May’23 witnessed a increase of 7% MoM to USD 4.65bn (Apr’23: USD 4.3bn). However, on an yearly basis, total imports decreased by 30% in May’23 (May’22: USD 6.6bn).
The import of goods was down 33% on YoY basis while up 3% on MoM basis during May’23. The import of services was down 12% YoY while up 32% MoM during May’23.
With this, the total imports during 11MFY23 clocked-in at USD 56.2bn, down 26% YoY.
Exports
Total exports (goods and services) increased by 23% MoM during May’23 to USD 3.2bn compared with USD 2.6bn recorded in the previous month.
On a yearly basis, total exports registered an increase of 6% in May’23 from USD 3.0bn in same period last year.
The export of goods was up 4% YoY and 23% MoM during May’23. Moreover, the export of services was up 20% on YoY and MoM basis, both during May’23.
During May’23, technology exports were up by 28% YoY (+24% MoM) to USD 236mn.
During 11MFY23, technology recorded exports worth USD 2,369mn (36% of the overall services’ exports) marking a 1% YoY decline.
Remittances
Remittances by overseas Pakistanis decreased by 4% MoM to USD 2.1bn during May’23 compared to USD 2.2bn during Apr’23.
On YoY basis, remittances decreased by 10% during May’23.
During 11MFY23, remittances went down by 13% YoY to USD 24.8bn as compared to 28.5bn in 11MFY22.
Foreign Direct Investment
Net foreign direct investment settled at USD 150mn in May’23 (+6% YoY), compared to a net inflow of USD 141mn during May’22.
During 11MFY23, net FDI was down by 21% YoY to USD 1.3bn compared to USD 1.7bn in same period last year.
China was the largest contributor with a net FDI of USD 374mn during 11MFY23 followed by Japan with a net FDI of USD 168mn.
During 11MFY23, major investment poured into the Power sector (USD 549mn) followed by Financial Business Sector (USD 280mn) and Oil & Gas exploration (USD 140mn).
Outlook
The current account surplus is likely to continue in the coming months, supported by a decline in imports and an increase in exports. However, the pace of the surplus may moderate due to a slowdown in global economic growth.
The government is taking steps to improve the country’s balance of payments, including increasing exports, attracting foreign investment, and reducing imports. These measures are expected to help reduce the country’s reliance on foreign aid in the long term.