CAD at 6-month high as outflows rise

Pakistan’s balance of the current account failed to stay in surplus for the second successive month, hitting a six-month high deficit of $269 million in the wake of a month-on-month increase in the import of goods and services in January 2024. Besides, foreign investors – mainly China – aggressively pulled out investments from some power projects running in Pakistan, resulting in an outflow of Foreign Direct Investment (FDI) by a notable $173 million in January 2024, interrupting a long spree of recording inflows in each month during the past two years. Moreover, such a large outflow in a month is seen after a gap of over five years. According to the State Bank of Pakistan’s (SBP) revised number, the current account recorded a surplus of $404 million in December 2023. The current account deficit surged to $269 million in January 2024 compared to $167 million in the same month of the last year, rising by 61% in the month under review on a year-on-year basis.