ISLAMABAD – Pakistan’s trade deficit widened by more than 100% in the first quarter (July to September) of the current fiscal year, showing that the external sector of the country’s economy is under pressure.
According to the latest data from Pakistan Bureau of Statistics (PBS). Pakistani imports rose 65.08 percent to $ 18.63 billion from July to September of fiscal year 2020-21, from $ 11.29 billion in the same period of the previous year. At the same time, the country’s exports were recorded at $ 6.97 billion during the period July to September of the year 2020-21, compared to $ 5.47 billion for the corresponding period of the previous year, showing growth of 27.32%.
Imports are growing at a very rapid rate relative to exports, which puts pressure on foreign exchange reserves. Government officials believed imports were increasing due to rising food prices on the international market as the country became a net importer of food. The external sector of the Pakistani economy is under pressure due to the increase in imports, which widens the current account deficit. The federal government had previously announced the imposition of regulatory fees and 100 percent cash payments for opening letters of credit for imports of non-essential luxury goods to control the growing current account deficit. Luxury items can be automobiles, master baths and varnishes, stationery, various textiles, cosmetics and non-essential food items.
Imports increase by 65.08 pc, exports by 27.32 pc during the period from July to September of fiscal year 2020-21
The Prime Minister’s adviser for trade and investment Abdul Razak Dawood said he was satisfied with the export figures. “We have just received provisional figures for the export of goods. Our exports increased by 27.4% in September 2021 to reach 2.41 billion USD, against 1.89 billion USD in September 2020, ”the Prime Minister’s adviser for trade and investment said on Twitter. He added that for the first quarter (Q1) of fiscal year 2021-22, exports increased 28% to reach $ 6.99 billion, compared to $ 5.47 million in the first quarter of fiscal year 2020-21. . “This is due to the hard work of our exporters and they deserve praise for this achievement,” he added.
However, he did not comment on the increase in imports. “The import figures are being analyzed in consultation with other government departments and will be released shortly,” the Commerce Ministry said. PBS later released the latest export and import data.
On a monthly basis, the trade deficit increased by 70.08% in September 2021. The trade deficit was recorded at 4.099 billion dollars in September 2021 against 2.41 billion dollars at the same time of the year. last. Imports again crossed the $ 6 billion mark on a monthly basis and stood at $ 6.48 billion in September 2021 compared to $ 4.3 billion in the corresponding period of the previous year. Exports were recorded at 2.38 billion in September of this year.
However, the finance ministry noted that the current account deficit will shrink from September. The strong recovery underway in Pakistan’s main export markets, the momentum of national economic dynamism, and specific government policies to boost exports are expected to push exports of goods and services above the $ 3 billion level. dollars and more in the coming months.
These expected developments would reduce the balance of trade in goods and services by around $ 3 billion in September 2021, as well as in the coming months. If remittances were to stabilize at around $ 2.5 billion and taking into account other secondary and primary income streams, the current account would remain in deficit but within a manageable range. These expectations depend on the absence of unexpected negative shocks. These can be generated by the potential slowdown in the economic recovery abroad (due to loss of confidence, inflationary fears, fears of a slowdown in monetary accommodation and geopolitical risks) and by a continued unexpected surge in imports. An international and national upsurge in COVID-19 infections also remains a significant risk factor.