Trade data shows a slow start to new fiscal year

Exports, imports fall in July, sparking doubts about govt projections.

ISLAMABAD: Exports and imports of the country dropped in July, flashing fresh warning signs about the health of economy and raising doubts about official projections for the current fiscal year.

The latest trade figures, released here on Friday by the Pakistan Bureau of Statistics (PBS), underline a sluggish start to the new fiscal year in sharp contrast to the rosy projections made by the finance ministry in budget documents. Both the exports and imports slipped into the negative zone and the trade deficit widened.

Exports fell by 4.6% year-on-year in July, marking the continuation of contraction in the first month of the new financial year. The country exported $2.05 billion worth of goods, $100 million less than exports made in July last year, according to the PBS.

Imports dropped by 0.73% to reach $3.66 billion, which was $27 million less than the import bill in July last year. The trade deficit stood at $1.6 billion, higher by 4.8% or $73 million against the same period a year ago.

“In 2012-13, the trade gap is not going to be significantly different from fiscal year 2011-12,” said State Bank of Pakistan Governor Yaseen Anwar while announcing the first monetary policy of this fiscal year on Friday.

In the previous year, the trade deficit widened 36.6% or $21.3 billion, a record high due to contraction in exports and double-digit growth in imports. However, the government had forecast a 5% growth in exports and 7% growth in imports.

It seems that the finance ministry has not learnt from past experience and again set a framework based on a rosy picture of international trade. For this fiscal year, it has set the export target at $25.8 billion, an increase of 9.7% over the previous year. Imports have been estimated at $42.9 billion, down from last year’s level of $44.6 billion.

The current account deficit is forecast to reach $4.8 billion or 1.9% of gross domestic product (GDP).

The rosy projections have been made despite the fact that the balance of payments position will remain under pressure due to external debt repayments including repayments to the International Monetary Fund (IMF), declining export volumes, rising international oil prices and weak capital inflows.

Month-on-month data

The month-on-month trade statistics, however, depict a comparatively different picture than the year-on-year figures. The trade deficit in July shrank 12.7% compared to June due to higher decline in imports than in exports. Exports fell 3.92% in July over last month while imports dipped almost 8%, according to the PBS.

Published in The Express Tribune, August 11^th, 2012.