Pakistan’s FY24 CAD Hits 13-Year Low, Remittances Surge 11% YoY

Staff Report: Pakistan posted a Current Account Deficit (CAD) of US$0.7 billion in FY24 (0.2% of GDP), the lowest in 13 years. The average CAD for the last 5 and 10 years was US$8.3 billion (2.6% of GDP) and US$8.4 billion (2.7% of GDP), respectively.

In June 2024, the CAD was US$329 million, up 33% MoM. The full-year primary deficit in FY24 clocked in at US$8.6 billion, the highest ever in the history of Pakistan. Based on the data available on the SBP website for 11MFY24, profit/dividend repatriation clocked in at US$1.8 billion compared to US$313 million in 11MFY23, while the annual average for FY18-22 was US$1.8 billion.

Remittances during FY24 clocked in at US$30.2 billion, up 11% YoY. Remittances showed impressive growth of around 30% YoY in 2HFY24, while they showed a decline of 5% YoY in 1HFY24. The rebound in the second half is attributed to currency and economic stability, which discouraged dollar savings/hoarding.

Foreign exchange reserves of the country in June 2024 were up 7% MoM to US$14.6 billion. Despite external debt repayment, reserves held by the State Bank of Pakistan (SBP) increased by 3% MoM to US$9.4 billion.

CPI inflation in June 2024 clocked in at 12.6% YoY compared to 11.8% in May 2024, in line with our expectations. On a MoM basis, CPI inflation increased by 0.5% in June 2024 compared to a fall of 3.2% the previous month. This takes the full-year FY24 average inflation to 23.4% compared to 29.2% in FY23.