KARACHI: After a three-month positive streak, Pakistan’s current account shifted from surplus to deficit in January 2025, driven by a sharp increase in the import bill.
According to the State Bank of Pakistan (SBP), the country recorded a current account deficit of $420 million in January 2025, compared to a surplus of $474 million in December 2024. The January 2025 deficit is also 4 percent higher than the $404 million deficit recorded in January 2024.
Meanwhile, the December surplus was initially reported at $582 million, but the SBP later revised it to $474 million in its latest data.
In addition, after recording a deficit of $402 million in the first quarter (July–September) of FY25, the current account showed a strong recovery in the second quarter (October–December), posting a surplus of $1.504 billion. However, a sharp rise in imports reversed the second-quarter surplus, pushing the current account into deficit in January 2025.
Pakistan’s goods import bill surged by 11 percent to $5.455 billion in January 2025, up from $4.89 billion in December 2024. Meanwhile, exports in January 2025 declined slightly by 4 percent to $2.94 billion. As a result, the overall goods trade deficit widened to $2.5 billion in January 2025, compared to $1.835 billion in December 2024.
On the other side, home remittance inflows maintained strong growth with $3 billion inflows in January 2025, marking a 25.2 percent year-on-year (YoY) growth from $2.4 billion in January 2024.
Overall, Pakistan’s current account is remained positive and posted a surplus of $682 million in the first seven months (July-Jan) of the current fiscal year in stark contrast to a massive deficit of $1.801 billion in the same period of the previous fiscal year.
The SBP has already warned that the country’s import bill is likely to increase in coming months due to improved economic and industrial activities.
With the robust workers’ remittances, the outlook for the current account balance has improved considerably and is now expected to remain between a surplus and a deficit of 0.5 percent of GDP in FY25, the SBP noted.
Consequently, the improved current account outlook, along with the expected realization of planned financial inflows, is likely to increase the SBP’s FX reserves beyond $13 billion by June 2025.
Copyright Business Recorder, 2025