Trade deficit narrows 9.4% during July-May

ISLAMABAD: The trade deficit narrowed 9.4 per cent during July-May of the current financial year on the back of a continuous pick-up in exports and a marginal growth in imports.

However, latest trade data indicates that the trend may reverse and the gap may widen in coming months.

The deficit shrank to $13.9 billion in the first 11 months of fiscal year 2010 from $15.3 billion a year ago, according to figures released by the Federal Bureau of Statistics (FBS) on Friday.

Exports stood at $17.6 billion, which were $1.4 billion or 8.9 per cent more than the corresponding period of the last financial year.

Imports were valued at $31.485 billion, 0.01 per cent or just $3.2 million more than the imports in the same period last year, but importantly the negative growth of imports has come to a halt.

The trade figures have surpassed the International Monetary Fund’s (IMF) estimates. The IMF had expected imports to be around $31 billion for the current fiscal year, which has already been crossed while June’s data is yet to come.

The IMF had estimated exports at $18.5 billion but the healthy trend shows that exports may reach near $19.5 billion.

However, the trade gap may start increasing instead of shrinking in the next fiscal year beginning July, indicated by a sharp rise in the deficit in May.

The trade deficit surged 46 per cent or $511 million to $1.6 billion in May against the same month last year.

Exports increased by 19.9 per cent to $1.8 billion in May compared to the corresponding month a year ago when exports were worth $1.5 billion, according to the statistics.

Imports increased 33 per cent in May over a year ago. Last month, Pakistan imported $3.4 billion worth of goods compared to imports of $2.6 billion in May 2009.

In May, the trade deficit was $1.6 billion or around 26 per cent more than April. Exports marginally increased by one per cent to $1.75 billion in May compared to $1.73 billion in April.

Imports in May rose 31 per cent against April. The country imported goods worth $3.4 billion against April imports of $2.6 billion.

Published in the Express Tribune, June 12^th, 2010.