Despite challenges, Pakistan's economy exhibited signs of improvement with a decrease in trade and current account deficits coupled with a notable rise in foreign direct investment (FDI) during the first five months (July-November) of the ongoing fiscal year 2023-24, reports WealthPK. According to the data from the ministry of finance, the total foreign investment for the period stood at $694.8 million, marking an increase from $575.5 million over the same period in FY23. The FDI stood at $656.1 million, showing a growth of 8.1% compared to $606.9 million over the same period of FY23.

The foreign exchange reserves, a crucial economic metric, rose to $12.85 billion, indicating the country’s financial stability and resilience. This marks a significant improvement from the $11.94 billion reserves recorded on December 22 last year. The current account posted a deficit of $1.16 billion for the Jul-Nov FY24 against a deficit of $3.3 billion over the same period last year, largely reflecting an improvement in trade balance. The country’s exports increased by 5% to $12.5 billion from $11.9 billion last year. The imports declined by 16% to $21.3 billion in 5MFY24 from $25.3 billion in 5MFY23, showcasing a more balanced trade scenario. Resultantly, the trade deficit reduced to $8.8 billion from $13.4 billion last year.

“The ministry of finance’s economic data reveals a promising trajectory marked by positive indicators. The FDI experienced a notable growth of 8.1%, reaching $656.1 million, showcasing increased confidence of foreign investors compared to the previous year's $606.9 million. This influx of foreign capital is a positive signal, which is essential for sustained growth and infrastructure development,” said Azfar Ahsan, former minister of state and chairman of Board of Investment (BOI). “The improvement in foreign exchange reserves further underscores the country's economic stability. With reserves rising to $12.85 billion from $11.94 billion recorded in the same period the previous year, Pakistan is better positioned to navigate potential economic challenges and maintain a favourable balance of payments,” he pointed out.

He added that a significant positive shift was observed in the current account deficit, registering a substantial decline from $3.3 billion to $1.16 billion during the Jul-Nov period of FY24. “The positive change we're seeing in the current account deficit is mainly due to a significant improvement in our trade balance and the implementation of effective steps. These strategies were designed to not only increase the amount of goods and services we sell to other countries but also to carefully control what we buy from them.” Ahsan said, “These actions are crucial because they ensure a healthier, more stable economy in the long-run, laying the foundation for sustained economic growth.”

Credit: Independent News Pakistan (INP)