KARACHI: Pakistan’s current account recorded a surplus of $1.8 billion during the first 11 months of the current fiscal year (FY25), largely supported by robust inflows of workers’ remittances.
Despite a gradual widening of the trade deficit, driven by a rising import bill and sluggish export growth, the strong home remittance inflows have helped cushion the external account, offsetting the impact of deteriorating trade dynamics.
The State Bank of Pakistan (SBP) on Tuesday reported that the country’s external account showed marked improvement, posting a current account surplus of $1.812 billion during the first 11 months (July-May) of FY25 compared to a deficit of $1.572 billion in the same period last fiscal year (FY24).
Cumulatively, Pakistan received home remittance inflows totaling $34.9 billion during July-May FY25, reflecting an impressive growth of 29 percent year-on-year. These robust inflows have been a key driver in supporting the country’s external position and largely contributed to the current account surplus recorded during the fiscal year.
According to the SBP data, Pakistan recorded a current account deficit of $103 million in May 2025, following a surplus of $47 million in April 2025. However, on a year-on-year basis, the May 2025 deficit narrowed significantly down 56 percent from the $235 million shortfall recorded in May 2024.
The current account recorded deficit in month of May due surge the imports and slight decline in exports. Pakistan’s import bill increased from $5.225 billion in April to $5.478 billion in May 2025 as against exports, which declined from $2.6 billion (April 2025) to $2.4 billion in May 2025. In addition, with 14 percent growth YoY basis, workers’ remittances clocked in at $3.69 billion in May 2025.
According to the SBP, import bill continued to grow in line with improving economic activity; while export growth decelerated, partly due to the challenging global trade environment. However, workers’ remittances continued to remain strong and more than offset the impact of the widening trade deficit on the current account.
Based on these trends, the SBP is expected that the current account to remain in surplus in FY25. However, the uncertain global trade environment, coupled with expected continued strong import demand, is projected to turn the current account into a moderate deficit in FY26.
Despite net financial inflows remaining weak so far, the Governor SBP Jameel Ahmed believed that SBP’s FX reserves are expected to increase to around $14 billion by end-June 2025.
Going forward, SBP in it monetary policy statement mentioned that external outlook is susceptible to multiple risks, which mainly stem from heightened geopolitical tensions, volatility in international oil prices, possible adverse impact of proposed budgetary measures, and potential shortfalls in planned financial inflows.
Copyright Business Recorder, 2025
