KARACHI - Pakistan's trade deficit has surged to 9.559 billion dollars during the six months of current financial year (Jul-Dec) FY09 as compared to 8.292 billion dollars of last fiscal mainly due to strong growth in imports. In percentage the trade deficit grew by 15.27 percent in first half of this fiscal. During July-December FY09, the total imports increased by 12.87 percent by touching the level of US$ 19.132 billion from US$16.950 billion of previous financial year, while the overall exports witnessed a moderated growth of 10.57 percent as rose to US$ 9.573 billion as against US$ 8.658 billion recorded in the six months of FY08. The official data on foreign trade showed that during HI-FY09, higher import prices caused upward growth in imports which outpaced the considerable improvement in export growth. The foreign trade experts are of the view that combined impact of lower commodity prices and easing of domestic demand pressure are likely to reduce the trade deficit during H2-FY09. They said the measures taken by the federal government and the State Bank of Pakistan have also yielded positive results and more relief is expected in the foreign trade in remaining six months of the ongoing fiscal. During December 2008, the month-on-month basis growth in trade deficit showed a massive decline as fell by 20.67 percent and narrowed to 815.9 million dollar as against 1.028 billion dollars of corresponding period of previous year. In the month of December this year the imports declined by 9.45 percent and amounted to 2.126b dollars as against 2.348b dollars in the same month last year. The exports last month also remained negative by 0.70 percent and ended at 1.310 billion dollars as compared to 1.320 dollars in FY08. Similarly, the size of the trade deficit further decreased to 815.9 million in December 2008 as against 1.196 billion dollars of last month this year (November 2008). It is important to mention here that the foreign trade witnessed downward trends during the period under review as compared to previous month. The growth in imports decelerated by 21.92 percent and stood at 2.126 billion dollars from 2.723 billion dollars last month however; in percentage the exports also decelerated by 14.18 percent as settled at 1.310 billion dollars as compared to 1.527 billion dollars in November 2008. It is worth noting here that the weakening in import growth is attributed to both, the substantial downtrend in international commodity prices as well as a relative ease in domestic demand. However, lower commodity prices could also hit export prospects. The sharp fall in international rice prices means that in H2-FY09 it is expected that export quantum will grow but values may decline, relative to H2-FY08. The improvements in external sector are expected to be more visible during H2-FY09 and coupled with fiscal prudence could potentially have impacts on monetary policy.