Trade gap widens 17% in five months

Deficit stands at $6.5b; imports and exports grow in double digits.

ISLAMABAD:

The trade deficit widened almost 17 per cent in five months (July-November) of the current fiscal year compared to the same period last year, as both imports and exports registered a double-digit growth.

Officials foresee the gap to increase further in coming months, as oil prices are once again soaring in the international market. The government’s policy of passing the full impact to the domestic consumers will also result in a further increase in prices of petroleum products.

The trade deficit - gap between imports and exports - stood at $6.5 billion during July-November this year, which was $938 million or 16.9 per cent more than the deficit in July-November 2009, shows the data released by the Federal Bureau of Statistics (FBS).

From July through November, exports to the rest of the world stood at $8.9 billion, which were $1.4 billion or almost 18 per cent more than last year’s exports. Imports during the period stood at $15.4 billion, showing a growth of 17.5 per cent over imports made last year.

Pakistan is doing business with the world without a trade policy as despite a passage of five months the commerce ministry has failed to announce the policy. There are no import and export targets for the current financial year.

Unofficial estimates show that exports may remain above $21 billion and imports will be around $39 billion by end-June 2011, a gap of $18 billion. The ongoing gas outages are likely to cause a reduction of $800 million to $1.5 billion in exports, say officials of the textile industry ministry and representatives of the All Pakistan Textile Mills Association.

In November alone, trade statistics depict a more gloomy picture. FBS figures show an increase of 33.4 per cent in trade deficit in November as compared to November 2009. Officials attribute the rise to increasing oil prices in the international market. Average oil prices in November stood at $88 per barrel. So far, average oil prices in December are $92 per barrel, which may further widen the trade gap, say the officials.

In November, the trade deficit stood at $1.4 billion, which was $338 million more than the gap in November 2009. Pakistan exported goods worth $1.8 billion as compared to $3.2 billion worth of imports. Growth in exports stood at 17 per cent whereas import growth was almost 24 per cent.

As compared to October, the trade deficit in November grew almost 10 per cent due to a significant fall in exports, says the FBS. In November, exports were registered at $1.8 billion, which were $212 million less than the exports of October. Imports also dropped by almost three per cent in November over October. In November, imports were recorded at $3.2 billion, $95 million less than the imports of October, says the FBS.

Experts foresee a further dip in exports in coming months, as the previous months’ growth was led by rice and cotton exports. Good returns on rice and cotton in the domestic market are discouraging their exports, say the experts.

Published in The Express Tribune, December 21st, 2010.