Current account deficit widens to $0.25 billion in July

Pakistan has posted a current account deficit in the first month of the new fiscal year, according to data released by the State Bank of Pakistan.

The current account balance recorded a deficit of $254 million in July 2025. However, the deficit shrank by 27% compared to $348 million in July 2024.

The deficit in July was mainly due to the widening trade gap, which increased by 44% to $2.7 billion as compared with $1.9 billion in the same month of the preceding year.

In June, the current account posted a surplus of $328 million, bringing the cumulative surplus to $2.1 billion (0.5% of GDP) in FY25.

In FY24, which ended on June 30, 2024, the current account recorded a deficit of $2.1 billion.

In July, workers’ remittances remained instrumental, as they more than offset the widening trade deficit. On the financing front, a sizable portion of planned official inflows materialized, propelling SBP’s foreign exchange reserves beyond $14 billion.

State Bank of Pakistan has said workers’ remittances are projected to grow at a slower pace in the future due to the high base effect and recent rationalization of home remittances incentive schemes.

Meanwhile, the trade deficit is expected to widen due to increased import demand, in line with the improving domestic economic activity, slowdown in global demand and unfavorable export prices, particularly of rice.

As a result, the current account deficit is projected in the range of 0 to 1% of GDP in FY26.
On the financing side, inflows are likely to improve, partly due to higher expected private flows following the recent upgrade in the country’s credit rating.

Based on this assessment, the SBP’s forex reserves are projected to rise to $15.5 billion by end-December 2025.