Financial woes: Trade deficit increases 28% in July and August
Further worsening expected in coming months.
ISLAMABAD:
Pakistan’s exports contracted 6% in the first two months of fiscal year 2014-15 (FY15), while imports grew about one-tenth, widening the trade deficit by 28.3% to $4.23 billion, according to the Pakistan Bureau of Statistics (PBS).
The trade figures released on Thursday by the national data collection agency suggest that the external payment position of Pakistan may worsen in coming months, as the country is already struggling to save the $6.6-billion Extended Fund Facility of the International Monetary Fund (IMF).
Receipts from exports stood at just $3.84 billion in July and August this year, a decline of $238 million or 5.84% compared to the corresponding period of previous year, according to the PBS.
Contrary to this, imports grew 9.5% to $8.1 billion in July and August, which were $697 million higher than the imports made in July and August 2013. Resultantly, the trade deficit in the two months of FY15 widened 28.3% to $4.23 billion. The trade gap was $975 million more than the previous fiscal year’s comparative period.
The negative growth in exports highlights the difficulties that the country may face in balancing its external accounts. The contraction came at a time when the government is trying to save the IMF loan programme.
According to analysts and government officials, the negative growth in exports was the result of the government’s decision to keep the exchange rate at a certain level. They added that the external sector was trying to adapt to the new ground realities, although officially Islamabad follows a free-float exchange rate regime.
The national planners have projected a 5.8% growth in exports and 6.2% rise in imports for the current fiscal year. Imports have been projected at $44.2 billion against exports at $26.99 billion, showing a trade gap of $17.2 billion.
Any shortfall in exports and higher imports will cause problems for the government in financing the current account deficit. The current account deficit for this year has been estimated at $2.8 billion or 1.1% of gross domestic product.
August statistics
The yearly figures depict a more disappointing scenario. In August, the trade deficit widened 76.7% over the same month of last year. Against a trade gap of $1.6 billion last year, the deficit ballooned to $2.8 billion in August this year, according to the data.
Receipts from exports were $1.9 billion in August compared to $2 billion in the same month of last year. However, imports grew $1.2 billion to $4.7 billion in August 2014.
Monthly data
Meanwhile, monthly trade statistics also depict a gloomy picture. The trade deficit in August widened 95.8% over July due to marginal contraction in exports and 40% growth in imports, PBS data showed.
Published in The Express Tribune, September 12th, 2014.
Pakistan’s exports contracted 6% in the first two months of fiscal year 2014-15 (FY15), while imports grew about one-tenth, widening the trade deficit by 28.3% to $4.23 billion, according to the Pakistan Bureau of Statistics (PBS).
The trade figures released on Thursday by the national data collection agency suggest that the external payment position of Pakistan may worsen in coming months, as the country is already struggling to save the $6.6-billion Extended Fund Facility of the International Monetary Fund (IMF).
Receipts from exports stood at just $3.84 billion in July and August this year, a decline of $238 million or 5.84% compared to the corresponding period of previous year, according to the PBS.
Contrary to this, imports grew 9.5% to $8.1 billion in July and August, which were $697 million higher than the imports made in July and August 2013. Resultantly, the trade deficit in the two months of FY15 widened 28.3% to $4.23 billion. The trade gap was $975 million more than the previous fiscal year’s comparative period.
The negative growth in exports highlights the difficulties that the country may face in balancing its external accounts. The contraction came at a time when the government is trying to save the IMF loan programme.
According to analysts and government officials, the negative growth in exports was the result of the government’s decision to keep the exchange rate at a certain level. They added that the external sector was trying to adapt to the new ground realities, although officially Islamabad follows a free-float exchange rate regime.
The national planners have projected a 5.8% growth in exports and 6.2% rise in imports for the current fiscal year. Imports have been projected at $44.2 billion against exports at $26.99 billion, showing a trade gap of $17.2 billion.
Any shortfall in exports and higher imports will cause problems for the government in financing the current account deficit. The current account deficit for this year has been estimated at $2.8 billion or 1.1% of gross domestic product.
August statistics
The yearly figures depict a more disappointing scenario. In August, the trade deficit widened 76.7% over the same month of last year. Against a trade gap of $1.6 billion last year, the deficit ballooned to $2.8 billion in August this year, according to the data.
Receipts from exports were $1.9 billion in August compared to $2 billion in the same month of last year. However, imports grew $1.2 billion to $4.7 billion in August 2014.
Monthly data
Meanwhile, monthly trade statistics also depict a gloomy picture. The trade deficit in August widened 95.8% over July due to marginal contraction in exports and 40% growth in imports, PBS data showed.
Published in The Express Tribune, September 12th, 2014.