Pakistan Economy_ External adjustment runs its course, (AKD Daily, Jan 20, 2020)
Pakistan Economy: External adjustment runs its course
- Latest data on external account sends out a reassuring message, with current account deficit (CAD) narrowing 80%YoY to US$0.37bn in Dec’19 vs. US$1.88bn in Dec’18 while remaining largely flat on a sequential basis.
- The YoY improvement was largely driven by a contraction in the trade deficit (both good & services) – which narrowed 39%YoY to US$1.99bn (vs. US$3.27bn in SPLY) - and strong remittances flows - which witness a jump of 20%YoY.
- From flows vantage, Dec’19 was full of happenings, with capital account recording net inflows of US$2.3bn. Strong funding inflows from different sources (i.e. IMF, ADB & carry trade) have allowed the country to easily swallow fairly large repayments of US$1bn on account of Sukuk/Eurobond and US$0.5bn against central bank’s deposits during the month.
- Moving into CY20, we think the pace of adjustment in the external account would slow down, with decline in imports having maxed out, thus the improvement - if any - would either come through exports or remittances.
AKD Research
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AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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