AKD Securities Limited – AKD Daily (January 19, 2023)

Karachi, January 19, 2023 (PPI-OT): Pakistan Economy: CAD clocks in at US$400mn for Dec’22

The Current Account Deficit for the month of Dec’22 clocked in at US$400mn, compared to US$252mn in the earlier month and US$1.9bn in the SPLY. For the first half of the year, the country recorded a CAD of US$3.67bn, lower by 60%YoY.

Improvement in CAD is attributable to refinement in the country’s trade deficit during the period, with the balance on trade of goods and services having dropped by 32%YoY to US$15.7bn in 1HFY23.

Pakistan received ~US$2.0bn in the form of Workers’ Remittances during Dec’22, down by 3%MoM and 19%YoY. To note, the average monthly rate for remittances inflow in 1HFY23 has been ~US$2.34bn – attributable to differential in the official and unofficial exchange rates.

Pakistan witnessed a net outflow of US$17mn during the month of Dec’22, compared to an inflow of US$81.8mn recorded in the previous month. The major outflow during the month was of US$222.7mn, most likely a part of the Tethyan Copper transaction for the Reko Diq project.

We expect the CAD for FY23 to clock in at US$9-9.5bn, as we expect administrative measures to be rolled back later in the year.