ISLAMABAD:
Pakistan’s trade deficit widened to about $20 billion in the last fiscal year, far more than the official and International Monetary Fund’s projections but marginally lower than the preceding year, as the government missed its first year’s export target.
The figures released by the Pakistan Bureau of Statistics (PBS) on Friday showed that the country exported $25.2 billion worth of goods compared to imports valued at $45.2 billion, leaving a gap of $19.98 billion in 2013-14 that ended on June 30.
Compared to the preceding year, the trade gap contracted by 2.5%, but it was far higher than the official and the IMF’s projection of $16.6 billion, suggesting the fixing of an unrealistic target by the PML-N government. The IMF too could not accurately project the trade gap.
The higher projected trade deficit will have a direct bearing on the country’s balance of payments position. The State Bank of Pakistan on Monday withdrew the balance of payments figures after releasing it in the morning.
Against the target of $26.6 billion, exports reached $25.2 billion at the close of fiscal year 2013-14, up 2.8% over $24.5 billion worth of shipments a year earlier, according to the PBS. The government has projected 3.6% growth in exports.
It is not the first important target that the government has missed. Earlier, it missed key targets such as economic growth rate, investments, savings, inflation and foreign direct investment.
The import bill remained at $45.2 billion, showing a marginal growth of 0.36%, higher than the IMF and official projections. The government had projected a $43.3 billion import bill in its annual plan while the IMF had estimated imports at $42.7 billion.
Missing the trade deficit target by a wide margin will increase the current account deficit – the gap between external receipts and payments.
Higher-than-projected current account deficit will lead to a drawdown on foreign currency reserves held by the State Bank of Pakistan, currently standing at just $9.4 billion.
For the new fiscal year, the government has projected a trade deficit of $17.2 billion. It aims to take exports to $26.9 billion while the import bill could reach $44.2 billion.
Month-on-month trade figures showed that imports grew 18% and stood at $4.33 billion in June over May. In June, exports contracted by 4.3% to $2.1 billion over the previous month.
The trade deficit in the month alarmingly widened by almost half and stood at $2.3 billion on the back of dipping exports, according to the PBS.
The monthly trend was also reflected in year-on-year figures as the trade gap in June this year widened 30.9% compared to the corresponding month in the previous year and stood at $2.31 billion.
Exports slumped 6.7% to $2.1 billion this June, compared to last year while imports increased one-tenth to $4.4 billion.
Published in The Express Tribune, July 19th, 2014.
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COMMENTS (7)
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No doubt our honourable Finance Minister is not an Economist but team under him do have economist. What are they doing ? I remember words of Dr.Hafeez Pasha he said once one of the minister in the past have suggested to privatize the budget deficit seem that same situation will again rise. Beside this Government is not interested in the long term goals and objectives and do things on persistent basis. All things are going in haphazard ways one of the latest prime example is Nandi-Pur Power Plant on which specialists and politics have change of words whom to believe. Simply Government is prioritizing actions which are of less positive results and more relying on China. So far so forth Trade is concerned Government is not able to finance things or they were not eager to do it. This has led to this target failure.
@optimist: It is not the percentage of gap but the capacity to finance it that is relevant.
Just a typo. The figures for exports and imports got swapped.
Well Dar believed in artificially lowering the dollar, so there you have it a huge dip in exports in June. Thats just the tip of the iceberg as exporters lose more customers due to lowering of the dollar.
The problem is with a high inflation rate, increasing cost of electricity and gas, how does Dar expect exporters to keep their costs constrained. Dar the genius will now have to face the prospect of letting the dollar rise. In the end, fundamentals matter. Short term gimmicks always fall flat.
With energy crisis easing up, this gap will be reduced in few years. On sidenote, KSE index just crossed 30,000 points. The country's economics is on the rise.
Taping never fixes the problem. And Ishaq Dar is no economist. I wonder, what if the Saudis had not given the alms to the Sharifs for supporting it in Syria.
we understand but it is not even half per cent! Why such a gloomy headline?