Surge in remittances, decline in imports drive surplus to $729m in November
KARACHI:
Following a substantial policy rate cut, Pakistan recorded its highest current account surplus in over a decade, reaching $729 million in November 2024. This positive development was primarily driven by a surge in remittances from overseas Pakistanis, while a significant reduction in the trade deficit further contributed to the surplus.
“November 2024 current account surplus stood at $729 million, marking a 15-year high and a 111% month-on-month (MoM) increase,” stated Shankar Talreja, Director of Research at Topline Securities. “This brought the cumulative current account surplus for the first five months of FY2025 (5MFY25) to $944 million, compared to a deficit of $1.67 billion in 5MFY24.”
The notable improvement in November’s surplus is attributed to a 14% MoM decline in the trade deficit and a 43% MoM drop in the services deficit. Additionally, the primary deficit fell by 7% MoM, reflecting broader economic stabilisation.
Speaking to The Express Tribune, Sana Tawfik, Head of Research at Arif Habib Limited (AHL), highlighted that the $729 million surplus is the largest monthly surplus since February 2015 and the second-largest since July 2013. “The recovery was primarily driven by a sharp increase in remittances, which surged 29% year-on-year (YoY) to $2.9 billion in November 2024,” she said. The majority of these inflows came from Saudi Arabia (up 34%), the UAE (up 50%), and the UK (up 20%).
On a five-month basis, remittances grew by 34% YoY, underscoring their vital role in stabilising the country’s external accounts. “While remittances provided strong support, exports also posted moderate growth,” she added. Exports of goods increased by 7% YoY, while exports of services registered an 8% YoY rise in November.
Despite an uptick in imports, the trade deficit narrowed sharply by 24% YoY in November, primarily due to a 9% decline in goods imports. This reduction was influenced by multiple factors, including a 2% MoM decline in machinery imports, a 4% MoM drop in food imports—partly driven by falling global palm oil prices—and a substantial 29% decline in petroleum imports. The fall in petroleum imports was linked to lower international oil prices, with the average price of Arab Light crude dropping from $76.34 per barrel in October to $74.85 per barrel in November, reflecting a 2% decline.
