Engineering Post Report
Amidst the uncertain and precarious global economic environment, where the global economy was lurching under the impact of the unprecedented COVID-19 shock, Pakistan ‘s external sector appeared as a key buffer for resilience during financial year 2020-21..
The comfortable external balance position of Pakistan was duly supported by surplus current account balance on the back of robust flow of home remittances from Overseas Pakistanis and a sustained recovery in exports.
Furthermore, the improvements in the services and primary income account also provided a cushion to turn the current account deficit of $4.7 billion in FY 2020 into a surplus of $ 773 million during July 2020-April 2021 period.
The inflow of workers remittances in Pakistan has been rising consistently since FY2018 and the trend continued in FY2021 with a meritorious growth of 29.0 per cent and reached $ 24.2 billion during July-April FY2021.
Export of goods also grew by 6.5 per cent during July-April FY2021 and stood at $ 21 billion as compared to $ 19.7 billion in the same period last year. Import of goods grew by 13.5 per cent to $ 42.3 billion as compared to $ 37.3 billion last year. Consequently, the trade deficit increased by 21.3 per cent to $ 21.3 billion as compared to $ 17.6 billion last year.
Pakistan’s total liquid foreign exchange reserves increased to $ 22.7 billion by the end of April 2021, up by $ 3.8 billion , indicating a growth of 20.1 per cent over the end-June 2020. On account of increased foreign exchange reserves, supported by home remittances, exports and financial support from International Financial Institutions, the Pakistani Rupee started to appreciate. The introduction of a market-based exchange rate regime also helped to stabilize the Rupee and the exchange rate reached Rs 153.5 per $ by the end of April 2021, effectively appreciating by 9.5 per cent over end-June 2020, according to the information available from the official sources on being contacted.
