The trade deficit gap between imports and exports, from July through September this year was $2 billion higher than the projections made by International Monetary Fund (IMF). The IMF had projected $4.48 billion trade deficit for July to September period.
Pakistan’s exports contracted by 10.1% in the first three months and stood at only $6 billion to $680 million lower than the exports made in the comparative period of the last fiscal year, according to figures released by Pakistan Bureau of Statistics on Tuesday.
The reduction witnessed despite much-trumpeted Vision 2025 of the Planning Commission that promises to take the exports to $150 billion in next ten years. To achieve this overambitious goal, the country has to increase the exports to $38 billion this year from the last year’s level of $25 billion.
Contrary to contraction in exports, Pakistan’s import bill increased to $12.5 billion in the first three months, showing an increase of $1.34 billion or 12% growth over last year’s first quarter imports. The IMF had projected that Pakistan’s imports would grow to $10.7 billion in first quarter –an assessment that went off the mark by $1.84 billion.
The result of contraction in exports and double-digit growth in imports was the trade deficit of $6.5 billion –showing an increase of 45.1% or $2.1 billion trade deficit in first quarter of the fiscal year.
The worrisome trend suggests that the current account deficit –the gap between external receipts and payments, would be far higher than the budgeted number of $2.8 billion or 1.1% of Gross Domestic Product, according to an economist working with a government agency.
He said the first quarter figures were not surprising as these were the outcome of exchange rate rigidity. The exchange rate rigidity results into higher demands for imported goods and fall in exports. The government has made its budget on the assumption of Rs100 to a dollar exchange rate parity, according to Finance Minister Ishaq Dar. However, the IMF’s projections show that the real value of rupee is at Rs114 to a dollar.
The independent analysts say that as the government has started facing difficulties in getting foreign loans, the result of the widening trade deficit would be erosion of foreign currency reserves held by the State Bank of Pakistan. By October 3, the official reserves stood at $8.8 billion as against the IMF’s projection of $10.9 billion for the first quarter of current fiscal.
The national planners have projected a 5.8% growth in exports and 6.2% growth in imports for the current fiscal year. The imports for the current fiscal year have been projected at $44.2 billion as against $26.99 billion exports, showing the trade deficit of $17.2 billion.
Yearly statistics
The yearly trade figures depict a gloomier scenario. In September alone the trade deficit widened 102.7% over the same month of the last year. As against a trade deficit of $1.17 billion in September last year, the deficit ballooned to $2.38 billion last month, according to the PBS.
As against $2.6 billion exports of September last year, the receipts from exports were $2.2 billion last month, showing contraction of 16.7%. However, the imports in last month grew to $4.6 billion –higher by about one-fifth over imports in the same month of last year.
Monthly statistics
On a monthly basis, the trade deficit in September contracted 15.2% over August due to contraction in imports and 14% growth in exports, data from PBS showed.
COMMENTS (19)
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Look at the cry babies. Now it seems the Dharnas are so effective that it will bring down the economy. But wait. What does Zardari and Saad Rafiq say. One says it is just a bubble. and the other says that the hawa nikal gai jalson mai say. Such hypocrocy. If you are a logical person, the dharnas will never make a difference on the economy. Dharnes never make a difference on written agreements. But yes the corrupt policies of Nawaz do make a difference.
@oats what happened to the infamous 3 Es Energy Education and Economy what nawaz promised ..he seemed to have forgotten pretty quickly his priorities lay elsewhere jungla bus foreign trips for personal interests with family members and loans ...btw pls don't try teaching me about economic indicaters I work in the industry UKX for a fund managing a portfolio
@oats please don't insult you're own intelligence they were loans not investment pmnl are masters at fooling ppl like yourselves this government does not care about governance it wants to enrich itself no institutions function in a fit and proper manner absolute shambles ..blaming PTI is laughable utter nonsense non compos mentis
@AHMAD BILAL:
just read the last line of the article .........
"Monthly statistics On a monthly basis, the trade deficit in September contracted 15.2% over August due to contraction in imports and 14% growth in exports, data from PBS showed."
isn't it dharna period when the protests & demonstrations where in full swing ???? So, how the exports jumped while the imports dived in the prime time dharna period as compared to earlier months of the quarter when the PML-N regime was stable with supposedly no political turmoil.............
@salman:
rightly said bro.............
@Imtiaz: IMF never said that everything was on track. On the contrary they didn't release the $500 million loan tranche because things are not going well. The government was hoping that the Americans would bring pressure on the IMF to release the tranche anyway but that didn't happen. Instead it was decided that government's performance would be assessed in December and based on that two tranches worth $1 billion in total might be released. Perhaps Dar will bring his expert accounting skills to the table and move some numbers around so that we can get those dollars that we so desperately need.
Are the people commenting here delusional? What does Imran Khan have to do with Pakistanis importing more than they are exporting? Did you guys even attend basic english lessons? If there was "disruption" by PAT/PTI, imports should have fallen not increased! Looks like those who support the ruling party are as intelligent as the finance minister.
When you artificially set the exchange rate; this is what happens. We knew in March that this would happen and all you needed were two basic classes in Economics. I guess that is rare in Pakistan.
One basket-case economy coming up shortly.
Funny, a couple of days ago IMF said everything was on track, in additon to Dar sahib? so they were expecting a widening of this gap.
Pakistan’s exports contracted by 10.1% in the first three months and stood at only $6 billion to $680 million lower than the exports made in the comparative period of the last fiscal year, according to figures released by Pakistan Bureau of Statistics on Tuesday.
That does not make sense, it is probably $680 million lower than the last comparative period. it cant go from $6 billion to $680 million.
@AHMAD BILAL: wow, I didn't realize all the trade chain from Karachi to Khyber, passed directly through D-chowk?
Read the article bro, the clear thread is that PMLN govt's projections were too optimistic. The article gives figures for one quarter from July to Sep. Since dharna started in mind-Aug, who do you blame for the July to mid-Aug period?
If Mr. Zardari and Sharifs who are most notorious persons in Pakistan are leading this nation then don't blame IK. We are hypocrites.
@ OATS... Do vite audit and resolve the issue. Any reason why PMLN is not doing this? I guess PMLN will now have an excuse of their incompetanices for the entire duration of their rule !
@silverfox: This is the direct result of Imran Khan and PTI's policy of harming Pakistan's economy and scaring away investments. As we saw, Chinese President had to postpone visit due to Dharnas and the PTI and PAT want to make sure that none of the economic plans of the government can take effect. Did you not see that loans stopped coming with the instability caused by Dharnas? The blame for economic worries lies squarely with PTI.
Export does not increase by setting targets but by taking concrete measures. No focus on cheap electricity, no value addition in agriculture sector, no focus on SMEs. Millions of young educated Pakistanis are jobless or leaving country. Doctors and Engineers either join corrupt Bureaucracy or leave country. Nobody thinks why it happens. Pakistan has become a farm/factory for middle eastern countries, here people get training and do job there. Until we don't bring basics changes in policies, and structure, no target will be achieved.
All other factors have been the same this quarter as in previous 4 quarters...except for some PATPTIs trying to destroy the system by any means possible, no matter what the cost is for the country. All the trade chain from Karachi to Khyber has been disturbed. So much so that farmers are unable to sell their produce properly. Even a fool can see that, but some people r so dumb that their affiliations have made them blind. At one side you call for civil disobedience, burning bills, not to pay taxes, using hundi hawala...and at the same time you want to be absolved of all responsibility when the results of your actions are reflected in figures. Atleast try to retain some tiny peace of logic in your arguments, hypocrites.
Trade will suffer when you have political instability in the country. This was the agenda of both PAT n PTI from day one. Hit the economy! They announced civil disobedience a night before Ishaq Dar was suppose to meet the IMF delegation in Dubai and continued sit in for a longer period to ensure no foreign dignitary visit the country resulting in the cancellation of much awaited visit of Chinese president. Imran n Qadri r destroying Pakistan to achieve their political objectives which is shameful to say the least
This is a big deal as the funding of the combined 4th/5th IMF loan installment is based not only on implementing increased fuel/utility rates but improvement in foreign currency reserves.
Blame it on IK!
What do you expect exports will suffer has energy crisis continues unabated government more interested in jungla bus projects were they receive kickbacks until energy situation improves exports will suffer also others factors at play corruption main cause little or no security responsibility lies squarely with the government but they will blame Imran khan pti