By Farooq Awan

Pakistan recorded a current account surplus of $121 million in January 2026, while workers’ remittances increased 11.3 percent to $23.2 billion during July-January FY26, according to the Monthly Economic Update & Outlook February 2026 released by the Ministry of Finance.

The January surplus marks a positive development in the country’s external account position during the ongoing fiscal year. Despite cumulative pressures earlier in the year, the monthly surplus indicates improved external balance dynamics at the start of the calendar year.

During July-January FY26, the overall current account position remained in deficit; however, the January performance reflects a shift toward stabilization. The improvement was supported by higher inflows through workers’ remittances, which continued to play a central role in supporting the external sector.

Remittances reached $23.2 billion during the first seven months of FY26, registering an 11.3 percent increase compared to the corresponding period last year. The rise in inflows reflects sustained contributions from overseas Pakistanis. Saudi Arabia and the United Arab Emirates remained among the leading source countries during the review period.

The report also notes that while remittance inflows strengthened, imports increased during the period, contributing to a widening trade deficit. The trade deficit stood at $20.5 billion during July-January FY26 as import volumes expanded. The growth in imports indicates higher economic activity and demand for goods, though it exerted pressure on the external balance.

Exports of goods and services recorded mixed trends during the period. While merchandise exports showed moderate performance, services exports, particularly information technology services, posted growth, partially offsetting the import expansion.

The report presents the current account dynamics as part of the broader macroeconomic framework during FY26. The monthly surplus, coupled with double-digit remittance growth, highlights strengthening inflows into the economy during the review period.

Overall, the external sector data indicate that while cumulative pressures remain due to a higher trade deficit, the January surplus and continued remittance growth have contributed positively to the balance of payments position in FY26.

Credit: INP-WealthPk