Cross-border exchange: Trade gap widens as export growth slows down
Gap between imports and exports widened to $1.84 billion in August.
ISLAMABAD:
Pakistan’s trade deficit significantly widened in August as imports grew at double the pace of exports which dropped below $2 billion for the first time in seven months.
The trade deficit – gap between imports and exports – widened to $1.84 billion, which was $570 million or 44.8 per cent more than the deficit in the corresponding month of last year, reported the Federal Bureau of Statistics on Saturday.
The deficit increased after unprecedented growth in the country’s exports slowed down. Exports in August rose to $1.96 billion, which were $226 million or 13 per cent more than exports made in August last year, but less than the earnings in previous months.
“Despite Eid holidays that delayed clearance of shipments and unrest in Karachi, the export earnings were still remarkable,” said Trade Development Authority of Pakistan Chief Executive Tariq Puri.
From February to July, exports remained above $2 billion that restricted the deficit and provided a critical cushion at a time when the International Monetary Fund’s loan programme was suspended.
Imports in August stood at $3.8 billion, which were $796 million or 26.5 per cent higher than imports in the same month last year.
In the Annual Plan 2011-12, the government has estimated exports at $25.8 billion and imports at $38 billion. However, after achieving exports of $25.2 billion last year, the government may jack up the target by 10 per cent and an announcement in this regard is expected soon. On Saturday, Prime Minister Yousaf Raza Gilani approved, in principle, a new trade policy.
On a monthly basis, the trade deficit also widened in August as compared to July on the back of a decline in exports. The deficit increased around 25 per cent after exports dipped 11 per cent and imports grew 3.2 per cent. In July, the country exported $2.2 billion worth of goods, which were $239 million more than August exports.
In the first two months of the current fiscal year (July-August), the trade deficit widened by around 20 per cent or $544 million and stood at $3.4 billion. The import bill totalled $7.5 billion, which was $1.3 billion more than the corresponding period of last fiscal year. Earnings from exports remained at $4.2 billion, showing a growth of 20.2 per cent.
Despite the fact that the trade deficit increased by double digits in the first two months, experts do not see any fallout on the country’s external financial position, at least for few more months.
Pakistan has over $18 billion in foreign exchange reserves. However, as the rupee is already under pressure against the US dollar, the start of IMF repayments from February next year may negatively affect the external balance sheet, independent and government experts predict.
Published in The Express Tribune, September 11th, 2011.
Pakistan’s trade deficit significantly widened in August as imports grew at double the pace of exports which dropped below $2 billion for the first time in seven months.
The trade deficit – gap between imports and exports – widened to $1.84 billion, which was $570 million or 44.8 per cent more than the deficit in the corresponding month of last year, reported the Federal Bureau of Statistics on Saturday.
The deficit increased after unprecedented growth in the country’s exports slowed down. Exports in August rose to $1.96 billion, which were $226 million or 13 per cent more than exports made in August last year, but less than the earnings in previous months.
“Despite Eid holidays that delayed clearance of shipments and unrest in Karachi, the export earnings were still remarkable,” said Trade Development Authority of Pakistan Chief Executive Tariq Puri.
From February to July, exports remained above $2 billion that restricted the deficit and provided a critical cushion at a time when the International Monetary Fund’s loan programme was suspended.
Imports in August stood at $3.8 billion, which were $796 million or 26.5 per cent higher than imports in the same month last year.
In the Annual Plan 2011-12, the government has estimated exports at $25.8 billion and imports at $38 billion. However, after achieving exports of $25.2 billion last year, the government may jack up the target by 10 per cent and an announcement in this regard is expected soon. On Saturday, Prime Minister Yousaf Raza Gilani approved, in principle, a new trade policy.
On a monthly basis, the trade deficit also widened in August as compared to July on the back of a decline in exports. The deficit increased around 25 per cent after exports dipped 11 per cent and imports grew 3.2 per cent. In July, the country exported $2.2 billion worth of goods, which were $239 million more than August exports.
In the first two months of the current fiscal year (July-August), the trade deficit widened by around 20 per cent or $544 million and stood at $3.4 billion. The import bill totalled $7.5 billion, which was $1.3 billion more than the corresponding period of last fiscal year. Earnings from exports remained at $4.2 billion, showing a growth of 20.2 per cent.
Despite the fact that the trade deficit increased by double digits in the first two months, experts do not see any fallout on the country’s external financial position, at least for few more months.
Pakistan has over $18 billion in foreign exchange reserves. However, as the rupee is already under pressure against the US dollar, the start of IMF repayments from February next year may negatively affect the external balance sheet, independent and government experts predict.
Published in The Express Tribune, September 11th, 2011.