ISLAMABAD-Major economic indicators have once again deteriorated in the month of July this year.
Indicators including inflation, exports, foreign remittances and currency value have deteriorated in the first month of the current fiscal year, according to the latest data of the ministry of finance. CPI inflation increased to 28.3 percent on YoY basis in July 2023 as compared to 24.9 percent in July 2022 whereas it reached 29.4 percent in the previous month.
The current account posted a deficit of $809 million for July FY2024 as against a deficit of $1.3 billion last year, largely reflecting an improvement in trade balance. Exports declined by 4.6 percent during July FY2024 and reached $2.1 billion ($ 2.2 billion last year). Imports declined by 23.5 percent during July FY2024 and reached $4.2 billion ($5.5 billion last year). Resultantly the trade deficit (July FY2024) reached $2.1 billion as against $3.3 billion last year. Exports in services during July FY2024 increased by 2.3 percent to $538 million as against $526 million. The imports in services increased by 45.3 percent to $ 811 million as compared to $558 million same period last year. The trade deficit in services stood at $273 million as against $32 million last year. As per PBS, during July FY 2024, exports stood at $2.1 billion ($2.3 billion last year), declining by 8.1 percent. The major export commodities which have shown positive growth during the review period include fish & fish preparations (27.2 percent in quantity & 2.2 percent in value), fruits (29.5 percent in quantity & 4.6 percent in value), cotton yarn (37.8 percent in quantity & 36.0 percent in value), plastic materials (176.2 percent in quantity & 64.8 percent in value) and pharmaceutical products (144.3 percent in quantity & 8.9 percent in value).
The FDI reached $87.7 million during July FY2024 ($74.8 million last year), increasing by 17.3 percent. FDI received from China remained $18.0 million (20.5 percent), Hong Kong $16.9 million (19.2 percent), Netherlands $12.1 million (13.8 percent) and Switzerland $10.1 million (11.5 percent of total FDI). Power sector attracted highest FDI of $45.1 million (51.4 percent of total FDI), oil & gas explorations $15.2 million (17.3 percent), and communication $8.0 million (9.1 percent). Foreign private portfolio investment has registered a net inflow of $16.3 million during July FY2024. Foreign public portfolio investment recorded a net inflow of $6.0 million. The total foreign portfolio investment recorded an inflow of $22.3 million during July FY2024 as against an outflow of 13.9 million last. Total foreign investment during July FY2024 recorded an inflow of $110.0 million as against $ 60.9 million last year.
In July FY2024, workers’ remittances were recorded at $ 2.0 billion ($ 2.5 billion last year), decreasing by 19.3 percent, due to several reasons which included: seasonal factors post-Eid decline, political and economic uncertainty. MoM, remittances decreased by 7.3 percent in July 2023 ($ 2.0 billion) as compared to June 2023 ($ 2.2 billion). Share of remittances (July FY2024) from Saudi Arabia remained 24.0 percent ($486.7 million), UAE 15.5 percent ($315.1 million), UK 15.1 percent ($305.7 million), USA 11.7 percent ($238.1 million), other GCC countries 11.3 percent ($228.3 million), EU 14.0 percent ($283.6 million), Canada 1.8 percent ($36.9 million), and other countries 6.5 percent ($ 132.4 million). The decline is also attributed to global economic slowdown as higher inflation in developed countries has led to higher cost of living abroad, thus reducing surplus funds that could be sent back to homeland as remittances.
Pakistan’s total liquid foreign exchange reserves increased to $13.1 billion on August 29, 2023, as with the SBP’s reserves raise significantly to $7.8 billion and commercial banks’ reserves remained at $5.3 billion. According to the data, in Jul FY2024, FBR tax collection not only grew by 17.5 percent but also surpassed the collection target by Rs.4 billion. Within total tax collection, revenues from domestic taxes grew by 19 percent while from customs duty 9 percent growth has been registered.