How did Pakistan go from $1.73 billion deficit to $691 million surplus?
According to SBP data, Pakistan recorded a current account surplus of $691 million during the first eight months of FY25, a sharp turnaround from a $1.73 billion deficit in the same period last year. February’s deficit shrank to $12 million, significantly down from January’s $399 million gap, primarily due to a 38.6% year-on-year surge in remittances.
Trade Trends & Export Outlook
Pakistan’s trade deficit remained steady at $2.3 billion in February, driven by a 10% increase in imports and a 6% decline in exports. Imports rose to $37.8 billion in 8MFY25, with oil imports contributing significantly due to increased volumes. On the other hand, cement and clinker exports saw a 27% increase, indicating renewed regional demand.
Non-textile exports increased 2.38%, while textile exports, still the country’s main export driver, showed promising growth. Topline Securities predicts textile exports may reach up to $19 billion by the end of FY25. IT exports also grew by 26% year-on-year, contributing $2.48 billion to the economy.
Currency Stability & Remittances: Key Anchors
The Pakistani rupee held steady, with a marginal depreciation of 0.3% against the USD. Remittances remained a lifeline, totaling $3.1 billion in February. Contributions were highest from Saudi Arabia ($744M), UAE ($652M), UK ($501M), and the US ($309M).
This stable exchange rate and inflow momentum helped cushion external accounts against growing import bills and provided much-needed liquidity to foreign exchange reserves.
Outlook & Policy Challenges
While the SBP maintained its policy rate at 12% in March, future decisions will depend on inflationary trends. Despite higher oil imports and subdued official financial inflows ($4.9B received vs. $19.3B budgeted), the SBP expects FX reserves to surpass $13 billion by June.
However, with $22B in debt repayments due in 2025 and slow progress in export diversification, risks remain. Policymakers must focus on structural reforms, export-led strategies, and enhancing energy efficiency to ensure sustainable external sector growth.
