AKD Securities Limited – AKD Daily(21 -03 -2023)

Karachi, March 21, 2023 (PPI-OT): Pakistan Economy – Impressive CAD for Feb’23

Current account deficit for the month of Feb’23 clocked in at a paltry US$74mn, compared to US$230mn in the earlier month. This takes the cumulative CAD in 8MFY23 to US$3.9bn, compared to US$12.1bn in the SPLY. The improvement can be attributed to import curbs that have been implemented by the GoP, which has kept the trade deficit in control.

Remittances in the month of Feb’23 clocked in at US$2.0bn, compared to the US$1.9bn recorded in the earlier month. The latest numbers remain well below the average for the 8-month period, US$2.3bn.

FDI during the 8MFY23 period clocked in at US$784mn, lower by 40.4%YoY. For the month of Feb’23, Pakistan witnessed a net inflow of US$100.9mn, compared to US$90.8mn in the SPLY.

While recent CAD figures paint a positive picture for the country, the fact that this has been achieved through administrative measures cannot be ignored. The resumption of the IMF program would remain in the limelight. For the year, we estimate the CAD for the year to clock in between US$5.5bn and US$6.5bn.