Jul-Aug C/A deficit stands at $543m

KARACHI Pakistan recorded a current account deficit of $543 million in the first two months of FY27, the State Bank of Pakistan's latest figures show. It was 36% narrower than the $853 million gap in the same period of last year, supported by robust remittance inflows. August alone recorded a $98 million shortfall, down from $445 million in July (revised up from an earlier $328 million) and from $324 million in August 2025. On paper, it is a sharp improvement. Underneath, the arithmetic is familiar. Goods and services exports in August rose only about 5% year-on-year to $3.33 billion. Imports rose faster, by about 8%, to $6.64 billion. Workers' remittances of $3.66 billion, up nearly 17% from $3.14 billion a year earlier, closed most of the hole. July-August remittances were about $7.3 billion, up 14.7%. The current account looks better when the diaspora sends more money. August goods exports were at $2.51 billion, up only 3.8% year-on-year, against imports of $5.68 billion, up 7.4%. The monthly goods deficit widened 10.4% to $3.17 billion. For July-August, the goods deficit rose 18.1% to $7.12 billion, with exports up 7% and imports higher by 13%. SBP's free-on-board (fob) goods series was even flatter in August, about $2.46 billion against $2.49 billion a year earlier, while the goods and services deficit for July-August FY27 widened to $6.75 billion from $5.96 billion. After successive textile packages and export-led growth claims, the factory basket is barely moving. Machinery, transport and metals imports are rising with activity. August services exports were $872 million against $677 million a year earlier, up 29%. July-August services exports reached $1.81 billion versus $1.41 billion. Exports of telecommunications, computer and information services were $394 million in August, up 17% year-on-year but down 6% month-on-month. Other business services rose 36% while transport gained 28%. Pakistan is drifting towards a services-and-remittances external account while merchandise trade stays anemic. That changes who earns the foreign exchange: more urban, skilled, digital, and leaves industrial employment and the old textile complex less central to the balance of payments than the official industrial policy still assumes. The country recorded travel exports of $110 million in August against $43 million a year earlier, up 156%. July-August travel receipts were $222 million versus $90 million. The FY26 travel exports had already jumped by more than half. IT exports surge Pakistan's IT exports rose 17% year-on-year to $394 million in August 2026, according to Topline Securities. The monthly figure was down 6% from July's $417 million, a dip Topline attributed mainly to fewer working days rather than a break in demand. The August print keeps the sector on a double-digit annual path that has now stretched across a full year of monthly readings. Receipts were $337 million in August 2025 and have since held a higher band, peaking at $437 million in December 2025 before settling in the mid-to-high $300 million through early 2026 and recovering above $410 million from March through July. Two-month (July-August) receipts of IT exports for FY27 reached $811 million. On a trailing-12-month basis, exports stood at $4.7 billion, up 21% from $3.9 billion a year earlier. That TTM level is consistent with the record $4.6 billion booked for full-year FY26, when the sector grew about 21% and met the lower end of the government's then-target range. Net IT exports – exports minus related imports – were $336 million in August, up 10% year-on-year. The high net export is why the industry matters for the external account: software, freelancing and IT-enabled services add foreign exchange with a far smaller import bill than goods. The policy bar is higher than the current growth. Under the Uraan Pakistan plan, the government has set an FY29 target of $10 billion for IT exports. "Under Uraan Pakistan, the government has set an FY29 target of $10 billion in IT exports; this implies a CAGR of 28.4% till FY29," noted Topline Securities. The compound annual growth rate (CAGR) of 28.4% is well above the roughly 17-21% pace of last year. Reaching that target will require more than volume in routine outsourcing. It will need larger enterprise contracts, higher-value work in areas such as AI, cybersecurity and product development, deeper market access, and a larger pool of export-ready firms. The year-on-year gains in August show the IT sector is still scaling. However, the month-on-month dip and the gap to the 28%-plus CAGR show that the next leap is not automatic. Foreign investment jumps The net foreign direct investment (FDI) reached $316 million in August, up 80% year-on-year and 77% month-on-month, taking 2MFY27 net FDI to $495 million, up 24%. Power and financial business led; China, Canada and the UAE were the named sources. Total foreign investment in August was $358 million against $133 million a year earlier. Portfolio investment recorded an outflow.