Balance of trade continues to improve for fifth straight month

Lower imports and higher exports lead to shrinking trade deficit.

ISLAMABAD: Pakistan’s trade deficit has narrowed significantly during the first half of the ongoing fiscal year due to a reduction in imports on the back of recessionary trends in different sectors of the economy, and a continuous growth in exports of nontraditional items.

The trade deficit – a measure of by how much imports exceed exports – shrank by almost 14% to $9.9 billion from July to December 2012, as against $11.5 billion in the corresponding period of the preceding fiscal year, according to the latest data released by the Pakistan Bureau of Statistics (PBS) there on Friday.

Official data shows that the trade deficit has shrunk for the fifth consecutive month because of a sustained fall in imports. The figures further state that exports have, meanwhile, registered an increase for the fourth month in a row.

During the first half of the year, exports grew 7.6% to $12.1 billion – higher by $849 million over the previous year. On the other hand, imports plunged 3.4% to $21.9 billion, which was $756 million less than last year’s corresponding import bill.



Although PBS has not yet released detailed data regarding trading activity as yet – the most recent release provides a summary only – available figures for the first five months show that the deficit has been narrowing due to growth in the export of nontraditional items like jewellery, molasses, other manufacturing goods and food stuffs. Imports, meanwhile, have been falling due to a slowdown in the textile and manufacturing sectors. The contraction in these two industries has, in turn, also resulted in a decline in the import of petroleum products.

A yearly comparison of trade figures shows that, in December, exports were higher by 6.2% year-on-year. The country exported $1.97 billion worth of goods during the month, $115 million higher than exports last December, according to PBS. Imports, meanwhile, dropped 13.8% in the previous month to $3.7 billion – $583 million less than December 2011. Resultantly, the trade deficit contracted by a hefty 29.3% to $1.7 billion in December 2012 compared to the previous year.

Similarly, month-on-month trade data suggests that exports grew almost 3.8% in December over November, while imports picked up slightly by 1.8%. The overall trade deficit shrank marginally to 0.5% over the preceding month.

Published in The Express Tribune, January 12^th, 2013.

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