ISLAMABAD - After a long time, Pakistan’s trade deficit recorded minor decline during first couple of months (July and August) of current fiscal year due to unexpected increase in exports.
The country’s trade deficit was recorded at $6.17 billion during July-August period of the ongoing financial year as against $6.25 billion of corresponding period of previous year, showing a minor decline of 1.25 percent. The deficit narrowed due to increase in exports as against the imports, according to the latest data of Pakistan Bureau of Statistics (PBS).
Pakistan’s exports have gone up by 5.05 percent to $3.66 billion during first couple of months of the current fiscal year. On the other side, the country’s imports have grown by only one percent to $9.8 billion during July-August period of the year 2018-19. Therefore, the trade deficit was recorded at $6.17 billion in two months.
“The exports have shown increase due to the sharp rupee depreciation in last few months and government’s incentives package to the exports oriented sectors,” said an official of the ministry of commerce. He further said that PTI-led federal government is also considering extending the incentives package to the exports sectors to enhance the overall exports of the country. Under the package, the government might provide electricity and gas tariffs at subsidised rates to the exports oriented sectors, he added.
The massive increase in trade deficit had widened the current account deficit to $18 billion during last financial year, which eroded the foreign exchange reserves of the country. The economic experts believed that current account deficit might once again touch $18 billion during ongoing fiscal year. The federal government is working to reduce the current account deficit by $4 billion due to the administrative and regulatory measures. The Economic Advisory Council recently discussed radical steps including a year-long ban on imports for cheese, cars, cell phones and fruits that could "save some $4-5 billion". Similarly, a strategy could be devised to generate additional $2 billion in exports, which could ease the pressure on current account deficit.
Pakistan’s exports enhanced by 8.44 percent to $2.02 billion in August 2018 from $1.86 billion of August 2017. Meanwhile, the imports recorded a growth of 1.4 percent and reached $4.99 billion in August 2018 from $4.92 billion in the same period of the last year. Therefore, the trade deficit was recorded at $2.98 billion in August 2018 as against $3.06 billion of August 2017, showing a decline of 2.87 percent.
On a month-on-month basis, exports in August massively increased by 22.54 percent to $2.02 billion from $1.65 billion of July 2018. Similarly, imports in August 2018 also increased by 3.18 percent to $4.99 billion from $4.84 billion of July. The month-on-month trade deficit this time was down by 6.8 percent and recorded at $2.98 billion during August 2018.