ISLAMABAD -  Pakistan’s trade deficit widened to historic level of $26.6 billion during ten months (July-April) of the current financial year due to the massive increase in country’s imports. 

The trade deficit, gap between exports and imports, enhanced by 40.1 percent and reached $26.6 billion during July-April FY2017 from $18.95 billion of the corresponding period of the last year. It was highest ever trade imbalance during ten months of a financial year.

The trade deficit had exceeded the level of $20.5 billion set by the government for the ongoing financial year. Pakistan’s imports are continuously enhancing as against contraction in exports. Pakistan’s current account deficit would enhance due to massive increase in trade deficit and decline in remittances. The increase in current account deficit could hit the country’s foreign exchange reserves. The International Monetary Fund (IMF) had observed that the current account deficit is expected to reach 2.9 percent of GDP in FY2016/17 owing to a higher trade balance—in part reflecting increased imports of capital goods and energy—and stagnant remittances.

The latest figures of Pakistan Bureau of Statistics (PBS) showed that imports increased by 19.88 percent to $43.47 billion during July-April of FY2017 from $36.7 billion of the last year. However, the exports tumbled by 2.29 percent to $16.92 billion in ten months of the current fiscal year from $17.31 billion of the same period of the previous year. Therefore, trade deficit was recorded at $26.6 billion during July-April 2016-17.

“Import bill is increasing due to surge in imports of power generating machinery, construction and mining and agriculture machinery, which is an investment,” said an official of the ministry of commerce. He further said that exports of the country had started enhancing from last couple of months due to the incentives package announced by Prime Minister.

The economists believed that Pakistan’s imports would exceed $50bn for the first time in its history. They said that government should review its trade policy to control the trade deficit, otherwise, the foreign exchange reserves would erode in no time.

The PBS data showed that Pakistan’s exports enhanced by 5.19 percent to $1.81 billion in April 2017 from $1.72 billion of April 2016. Similarly, the imports also recorded an increase of 30.88 percent and reached $5 billion in April 2017 from $3.82 billion in the same period of the last year. Therefore, the trade deficit was recorded at $3.19 billion in April 2017 as against $2.11 billion of April 2016, showing a growth of 51.69 percent.