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KARACHI: Pakistan’s current account posted a $ 662 million deficit in December 2020 after surpluses for five consecutive months. The primary reasons behind the deficit in December 2020 is a massive rise in imports. The State Bank of Pakistan’s (SBP’s) statistics released on Wednesday revealed that the country posted a current account deficit of $662 million in December 2020 as against a surplus of $513 million in November 2020. The current account deficit in December 2020 is the highest deficit after the June 2019 deficit of $ 981 million.

In addition, the deficit in December 2020 is also some 130 percent higher than December 2019, in which the deficit was $287 million.

Cumulatively, the current account remained in surplus during the first half of the current fiscal year (FY21). Current account recorded $1.131 billion surplus in July-December of FY21 compared with a deficit of $2.032 billion in the same period of last fiscal year (FY20).

According to SBP, exports and remittances continued to grow steadily in December 2020 compared to last year. Imports of some essential food items as well as growth-enhancing capital goods, oil and industrial raw materials also rose on the back of the domestic economic recovery, it added.

Total exports and remittances were also up by 8 percent and 16 percent during December 2020, respectively. Imports rose 32 percent YoY to $5.019 billion in December. Exports, however, increased 7 percent to $2.251 billion.

Analysts said that after the several months economic activity is gaining momentum as the Large Scale Manufacturing (LSM) index surged by 14.45 percent in November, while cumulatively, the index picked up 7.4 percent year-on-year in the five months of the current fiscal year. During the first half of this fiscal year, the goods trade deficit was $11.404 billion with 11.803 billion exports and $23.207 billion imports. Cumulatively, goods, services and income deficit was $15.11 billion in July-Dec of FY21 compared to $14.591 billion in the same period of last fiscal year.

Copyright Business Recorder, 2021