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Pakistan exhibits mixed key economic indicators

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Pakistan recorded a Current Account Deficit (CAD) of US$270mn in May 2024 after three months of surplus. The higher CAD is mainly due to a higher primary deficit of almost a billion dollars than the monthly average of the first ten months. In a post-MPC briefing in May 2024, the Governor also said they paid over a billion dollars alone in May 2024 on profit/dividend repatriation. This takes the 11MFY24 CAD to US$464mn vs. US$3,765mn in 11MFY23.

In May 2024, Pakistan recorded the highest monthly remittances of US$3.24bn, up 54% YoY and 15% MoM. For 11MFY24, foreign remittances have clocked in at US$27bn, +8% YoY. Alongside the Eid-related inflows, higher remittances in May 2024 and 11MFY24 (+54% YoY and 8% YoY, respectively) can also be attributed to a significant surge in Pakistanis who emigrated to other countries in the last two years (2022/2023) with an average of 850k people vs an average of 323k between 2017-2021.

The country’s foreign exchange reserves in May 2024 were up 3% Month over Month to US$14.2bn. However, reserves held by the State Bank of Pakistan (SBP) remained flat month over month at US$9.1bn.

Pakistan’s CPI inflation clocked in at 11.8% YoY in May 2024, the lowest reading in 29 months, vs. 17.3% in April 2024. This came better than industry expectations of 13.7%, according to a Bloomberg Survey. On a MoM basis, CPI inflation witnessed a significant fall of 3.2ppts, led by a 783bps decline in Food, a 163bps decline in transport, and 133bps in housing, water, and electricity segments. This takes the 11MFY24 CPI reading to 24.52%.

Courtesy – Topline Research

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