Trade deficit widens 32% in Dec

ISLAMABAD:

Pakistan’s trade deficit widened nearly one-third in December 2020 despite a much-trumpeted increase in exports, which was not sufficient to match the surge in imports that jumped to over one-and-a-half-year high of $5 billion.

The gap between imports and exports increased to $2.7 billion in December over a year ago, a jump of $651 million or slightly above 32%, the Pakistan Bureau of Statistics (PBS) reported on Thursday.

The 32% increase in deficit was due to the spike in imports that overshadowed a gradual improvement in exports. In December 2020, imports surged to $5 billion compared to $4 billion in the same month of previous year, which reflected an increase of 25.2% or $1.01 billion. The $5 billion worth of imports were the highest in the past 19 months. Last time in May 2019, the imports had amounted to $5.04 billion.

Exports showed a significant improvement and surged to $2.35 billion in December, an increase of 18.3% or $364 million. But the increase was not sufficient to contain the trade deficit.

 

“I have received regional export trends and this shows that, compared to our exports, the exports of India and Bangladesh for Nov/Dec 2020 showed a negative growth. I wish once again to congratulate the exporters and the Ministry of Commerce for this achievement,” tweeted Prime Minister Imran Khan on Thursday. There was a marginal reduction of 0.8% in India’s exports last month but its monthly exports of $26.9 billion were more than the total annual exports of Pakistan.

Similarly, there was a 6% dip in exports of Bangladesh and still Dhaka exported $3.3 billion worth of goods last month, 40% higher than Pakistan’s export receipts in the same period.

During the July-December 2020 period, exports increased 5% and stood at $12.1 billion as compared to $11.5 billion in the same period of last year, according to the national data collecting agency. In absolute terms, there was an increase of $574 million in exports during the first half of current fiscal year.

Pakistan’s exports have long remained around $2 billion a month and the trend did not significantly change despite 39% currency depreciation during the PTI government’s tenure in the past two years. A few years ago, the exports had peaked to $2.3 billion and then again settled below $2 billion.

Imports during the July-December period increased 5.7% or $1.3 billion to $24.5 billion. As a result, the balance of trade recorded an increase of 6.4% to $12.4 billion, stated the PBS.

The government has already missed the annual export target in its first two years. For the current fiscal year, it has set the export target at $22.7 billion, which will require 6.2% growth.

Exports in the first six months were equal to only 53% of the annual target. But imports in the first half of the fiscal year were equal to about 58% of the annual target.

On a month-on-month basis, the growth in imports was double than exports. There was an increase of $178 million in export receipts as compared to the preceding month, showing 8.2% growth. Total monthly exports amounted to $2.35 billion.

Imports registered an increase of 16.8% and stood at $5 billion last month. In absolute terms, there was an increase of $724 million in the import bill last month.

As a result, the trade deficit widened 25.6% or $546 million in December over November.

Published in The Express Tribune, January 8th, 2021.

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