KARACHI: The country’s current account deficit narrowed to $50 million in February 2021 compared to $210 million in January 2021, the State Bank of Pakistan (SBP) reported on Sunday.

The current account deficit was down by 75 percent in February 2021 compared to February 2020. The current account deficit for the month of Feb 2021 was $50 million compared to $197 million in February 2020, depicting a decline of $147 million.

In addition, the current account deficit in February 2021 is also some 76 percent or $160 million lower than January 2021, in which deficit was $210 million.

Overall, the current account remained in surplus of $881 million during the first eight months of this fiscal year (FY21) compared to $2.741 billion deficit in the same period of the last fiscal year.

According to SBP, surplus in current account is helped by a continuous strong growth in workers’ remittances and a sustained recovery in exports since Nov 2020 in year-on-year terms, which more than offset increase in imports due to domestic food shortages and recovering economic activity.

As the economy is recovering, the trade deficit is widening on the back of imports of capital goods and industrial materials as well as food, together with rising international commodity prices. However, despite that the SBP is expecting that the current account deficit in FY21 likely to remain below 1 percent of GDP supported by continued strong prospects for remittances and pickup in exports, especially high value-added textiles.

Analysts said that the primary reason for the improved current account is the rise in total exports and healthy inflows of home remittances during this fiscal year. The home remittances sent by overseas Pakistanis remained above $2 billion for the last 9 months. They said that the recovery in exports will also support the external account.