Pakistan recorded its third consecutive Current Account Surplus of US$255mn in May 2023 against a surplus of US$78mn in April 2023. Tighter monetary and fiscal policy along with administrative steps taken by the government have led to a shrinking trade balance. CAD for 11MFY23 clocked in at US$2,943mn against a CAD of US$15,160mn in 11MFY22.

Remittances declined 5% MoM to US$2.1bn in May-2023 amid higher gap between interbank and open market exchange rates.

Foreign exchange reserves of the country in May 2023 were up 1% MoM to US$9.5bn. However reserves held by SBP were down 8% MoM to US$4.1bn in May-2023. The decline in SBP’s FX reserves is due to debt repayment.

Pakistan’s GDP growth is provisionally estimated at 0.29% for FY23 as against target of 5% for FY23 and 6.10% in FY22. Agriculture and Service Sector grew by 1.55% and 0.86% respectively while Industrial contracted by 2.94% in FY23.

CPI inflation in May 2023 surged to 38.0% as against 36.4% in April 2023 led by higher food inflation. The major cause of higher inflation readings during the year has been currency devaluation. On MoM basis, inflation clocked in at 1.58%. In 11MFY23, inflation averaged 28.91% vs. 11.26% in same period last year.

Courtesy- Topline Securities