KARACHI: Pakistan’s current account deficit narrowed by 38 percent year-on-year (YoY) during the first month of the fiscal year 2026-27, supported by higher exports and healthy workers’ remittances.
According to statistics released by the State Bank of Pakistan (SBP) on Tuesday, the country posted a current account deficit of USD 328 million in July 2026, compared with a deficit of USD 529 million in July 2025, showing an improvement of USD 201 million.
On a month-on-month basis, the current account deficit also declined by 60 percent or USD 486 million in July 2026 compared with June 2026, when the current account deficit stood at USD 814 million.
READ MORE: Record remittances fail to offset import surge as Pakistan posts $139mn C/A deficit in FY26
The lower current account deficit was mainly supported by a 17 percent MoM and 9 percent YoY increase in goods exports. Pakistan’s goods exports rose to USD 3 billion in July 2026 from USD 2.7 billion in the same month last year. The July export figure was the highest monthly level recorded in the past 19 months.
In addition, workers’ remittances increased by 13 percent YoY to USD 3.6 billion in July 2026, providing further support to the country’s external account position.
Going forward, SBP Governor Jameel Ahmed expressed optimism that Pakistan’s current account deficit will remain contained during the current fiscal year, supported by improving exports, strong workers’ remittances and a stable external account position.
As per SBP estimate, the current account deficit is expected to widen in line with the pickup in economic activity, though it is assessed to remain in the range of 0 to 1 percent of GDP in FY27.
It also projected that workers’ remittances are likely to further grow to finance a large part of the higher projected trade deficit. With the realisation of planned official inflows and some likely improvement in private flows, SBP’s foreign exchange reserves are targeted to increase to USD 20.20 billion by end-December 2026. With the current account deficit remaining contained in FY26, the realisation of planned official inflows and continued foreign exchange purchases from the market have helped strengthen the country’s external position.
As a result, the SBP’s foreign exchange reserves have already surpassed the end-June 2026 target of USD 18 billion. It may be mentioned here that the current account posted a deficit of USD 139 million in the last fiscal year (FY26), close to the lower bound to the projected range for the year.
Analysts said that although overall current account is remained in deficit; however, it narrowed significantly on both a month-on-month and year-on-year basis with healthy home remittances inflows and sufficient growth in exports.
Copyright Business Recorder, 2026
Comments