Exports remain slow, mainly due to the global slowdown and rising electricity problems, posting a USD68 Million decrease. Major improvement in the import bill, which decreased by 21% month-on-month basis. However, the decrease in imports isn't necessarily good. A decline in machinery, oil purchases and other vital intermediate goods may translate into lower productivity in coming months. Current Account accumulated into a USD82 Million.
Workers remittances are up at USD780 Million. At an annualized basis, this sums up to USD9.36 Billion, 20% higher from last year. Persistent job losses in the Middle East and North America, and rising reverse migration might contribute to lower remittances later in the year. Pakistan depends heavily on workers' remittances to meet balance of payments, and any shortfall from target can post problems. Portfolio investments are also on the rise. Net FPI for the month on of August was USD62 Million; on daily basis investments up to USD23 million were observed. Rating Agencies like Credit Swiss have rated highly of the KSE, leading to positive investor confidence. Local investors, however, should be vary of the volatile foreign cash. Global investors leave at the first sight of instability and can lead another stock market crash.
For the first two months of financial year, FDI has decreased by 58%, from same period last year. This number should further wary the policy makers, as it represents long term aspirations of foreign investors, as opposed to FPI, which is only indicative of short term performance. Overall balance for August stands at USD2.1 billion and if the performance continues, Pakistan Economy can be out of the Balance of Payment crises triggered in October last year.
