Trade deficit increases to $13.2b in seven months

Exports remain flat while imports rise in double digits in July-January.

ISLAMABAD: Pakistan’s trade deficit widened to $13.2 billion in the first seven months of the current fiscal year as growth in exports plateaued while imports kept growing in double digits.

The trade figures released on Tuesday by the Pakistan Bureau of Statistics show that the double jeopardy in international trade for the country continues for yet another month.

From July to January, the trade deficit of $13.2 billion was $3.8 billion or 39.8 per cent higher than the gap in the corresponding period of the previous year.

The import bill surged 16.8 per cent and stood at $26.4 billion in July-January 2011-12, an increase of $3.8 billion over imports in the corresponding period in the previous year. However, exports during this period remained at $13.2 billion, only $33 million or 0.25 per cent higher than last year.

“The country’s balance of payments position is expected to deteriorate further in coming months due to pursuance of expansionary policies which will increase imports,” said Dr Vaqar Ahmad, Head Economic Growth Unit of the Sustainable Development Policy Institute.

The figures also indicate that the government is likely to miss its trade targets set for the current fiscal year. It has estimated 13 per cent growth in imports while increase in exports has been assessed at 3 per cent.

Contrary to that, the International Monetary Fund (IMF) in its latest report on Pakistan has estimated that exports may dip 1.8 per cent while imports can grow 9.2 per cent.

The seven-month figures indicated that the deficit may widen to $16 to $17 billion, said a senior finance ministry official, adding the import bill was likely to further increase due to a surge in oil prices in the international market and depreciation of the rupee against the dollar.

January data

In January, exports plummeted 15.4 per cent while imports rose around 6 per cent, causing a 49.2 per cent increase in trade deficit over the corresponding month of the previous year, according to PBS data.

Exports totalled $1.95 billion, $354 million less than the exports made last year. Imports grew to $3.7 billion, $205 million higher than the previous year.

The trade deficit widened to $1.7 billion in January, $559 million higher than the deficit in January 2011.

January was the fourth consecutive month when exports slipped into the negative zone and the sixth consecutive month when exports stood below $2 billion.

However, the monthly figures also depicted an interesting trend. When compared with December 2011, exports in January rose to $1.95 billion, up $99 million or 5.3 per cent. Imports, however, slipped to $3.7 billion, down 14.4 per cent from December.

As a result, the trade deficit contracted around 30 per cent and stood at $1.7 billion. In December, the gap was $2.4 billion.

Published in The Express Tribune, February 15^th, 2012.