Q1 CA deficit soars 16pc YoY on higher imports

Karachi: The country's current account deficit expanded by 16 percent in the first quarter of the current fiscal year, primarily due to a surge in imports, according to the State Bank of Pakistan (SBP). The SBP disclosed on Friday that Pakistan recorded a current account deficit of USD 874 million from July to September of FY27, up from USD 755 million in the same period last fiscal year (FY26).

This represents a 16 percent increase. In September 2026, Pakistan's current account deficit was recorded at USD 356 million, a stark contrast to the surplus of USD 133 million in the same month of the previous year. For the month of September 2026, the current account deficit surged to USD 356 million, up from USD 73 million in August 2026, marking a 388 percent increase.

The sharp rise in imports has been a major factor in the widening current account deficit. The import bill has been on the rise in line with expectations, driven by robust domestic demand as the economy recovers and growth picks up. The country's import bill rose from USD 15.5 billion in the first quarter of FY26 to USD 17.7 billion in the same period of this fiscal year.

However, higher inflows of remittances are helping to finance the widening current account deficit. Pakistan received remittances of USD 10.8 billion in the first quarter of this fiscal year, a 13 percent increase. The SBP projects that robust remittances and growing Information Communication and Technology (ICT) exports will help keep the current account deficit within 0-1 percent of GDP by the end of this fiscal year.