Current account deficit crosses $7 bln

Country’s current account deficit widened to $7.016 billion in the 200607 fiscal year ended on June 30, from $4.99 billion in the previous year, the State Bank of Pakistan (SBP) said on its Web site on Saturday.
The deficit is equivalent to about 4.9 percent of country’s estimated $145 billion GDP for the year just ended.
A SBP official said the current account switched into a slight surplus in June, though the figure was not given.
Asif Qureshi, head of research at brokers Invisor Securities, took some comfort in the June performance, but was concerned how long the improvement would last.
“The deficit number is better than expected, but the question is how sustainable is this positive trend, as the trade gap is yet to show a slowing trend,” he said.
Pakistan’s trade gap in 200607 widened to $13.529 billion, an increase of 11.53 percent over the previous year, according to data from the Federal Bureau of Statistics.
Analysts said the change in trend in the current account number, coupled with a slower price increase in June, may prevent the central bank from further tightening monetary policy.
The SBP is scheduled to release is six-monthly monetary policy statement later this month.
In June, Pakistan’s consumer price index (CPI) showed an year-on-year increase of 7.0 percent, slower than the 7.41 percent recorded in May. For 200607, the CPI came at 7.77 percent, slightly lower than 7.92 percent in 200506.

Copyright Reuters, 2007