Pakistan’s Economic Gains: Lower Deficits, Record Remittances in July 2024

Staff Report: Pakistan recorded a Current Account Deficit (CAD) of US$162 million in July 2024, compared to US$741 million in July 2023 and US$313 million in June 2024. The deficit was higher than expected due to a larger trade deficit of US$2.4 billion, as reported by the State Bank of Pakistan (SBP) in July, compared to the previously reported US$1.97 billion.

Typically, the SBP’s deficit numbers are lower than those reported by the Pakistan Bureau of Statistics (PBS).Market Rallies, KSE 100 Gains 0.44% Amid MARI’s Record Profit and T-Bill Yield Decline

Pakistan registered monthly foreign worker remittances of US$3.0 billion, the highest ever recorded for the month of July. This marks a 48% year-on-year increase, though it is down 5% month-on-month.

The country’s Debt-to-GDP ratio fell to a six-year low in FY24 at 70%, as nominal GDP grew faster than debt, primarily driven by higher inflation.

Pakistan’s budget deficit improved to 6.8% of GDP (Rs7.2 trillion) in FY24, compared to 7.78% of GDP (Rs6.5 trillion) in FY23. The primary balance also improved, achieving a surplus of 0.9% of GDP (Rs953 billion) in FY24, compared to a deficit of 0.98% of GDP (Rs826 billion) in FY23.

Foreign exchange reserves increased by 3% month-on-month to US$14.4 billion in July 2024. However, reserves held by the SBP fell by 3% month-on-month, standing at US$9.1 billion.

CPI inflation for July 2024 was recorded at 11.1% year-on-year, compared to 12.6% in June 2024. On a month-on-month basis, CPI inflation rose by 2.1% in July 2024, compared to a 0.5% increase in the previous month. Food inflation came in at 1.56% year-on-year and 4.67% month-on-month. Core inflation stood at 11.7% year-on-year for urban areas and 16.9% year-on-year for rural areas.