Pakistan’s External Position Improved in FY24 Due to Higher Exports, Remittances

The ministry of finance said Tuesday that Pakistan’s external account position improved in the fiscal year 2023-24 (FY24) due to a tangible increase in exports and remittances. In its Monthly Economic Update & Outlook for July 2024, the finance division highlighted that in FY24, the current account deficit shrank to $0.7 billion compared to $3.3 billion last year. Goods exports increased by 11.5 percent, reaching $31.1 billion, while imports remained at $53.2 billion, compared to $52.3 billion FY23 (0.9 percent growth). This has led to a goods trade deficit of $22.1 billion, down from $24.8 billion last year. As per the Pakistan Bureau of Statistics, the export commodities that registered significant positive growth include Rice (61.8 percent), Fruits (49.2 percent), Cotton Yarn (24.8 percent), and Plastic Materials (79.3 percent). The major imported items include Petroleum products ($6.6 billion), Petroleum crude ($5.5 billion), LNG ($3.9 billion), and Palm Oil, plastic materials and Iron & steel ($7.1 billion). The service exports grew to $7.8 billion (up 2.8 percent). In contrast, service imports were recorded at $10.1 billion (17.1 percent up), resulting in a service trade deficit of $2.3 billion compared to $1.0 billion in the previous year. Foreign Direct Investment (FDI) stood at $1.9 billion, 16.9 percent up from the previous year. The main contributors to this growth were China ($568 million), Hong Kong ($358.5 million), and the UK ($268 million). The power sector received the FDI of $799.9 million, accounting for a 42.1 percent share, followed by Oil & Gas exploration with $303.6 million (16 percent share). In June 2024, FDI saw a 37.8 percent YoY increase. Private sector Foreign Portfolio Investment (FPI) had a net inflow of $120 million, while Public FPI recorded a net outflow of $503 million. Workers’ remittances reached $30.3 billion in FY2024 (10.7 percent increase), with the largest share from Saudi Arabia. Remittances also increased by 44.4 percent YoY in June 2024. Pakistan’s total liquid foreign exchange reserves were recorded at $14.7 billion on July 12, 2024, with the State Bank of Pakistan’s reserves at $9.4 billion.