ISLAMABAD - Pakistan’s trade deficit swelled to historic $29.99 billion during eleven months (July-May) of the ongoing financial year due to massive increase in imports and decline in exports.

The trade deficit, gap between exports and imports, enhanced by 42.12 percent and reached $29.99 billion during July-May period of FY2016-17 from $21.11 billion of the corresponding period of the last year. It was highest ever trade imbalance during eleven months of a financial year.

The latest figures of Pakistan Bureau of Statistics (PBS) showed that imports increased by 20.6 percent to $48.54 billion during July-May period from $40.25 billion of the last year. However, the exports tumbled by 3.13 percent to $18.51 billion in eleven months of the current fiscal year from $19.14 billion of the same period of the previous year.

The eleven-month trade deficit is $10 billion more than the annual trade deficit target of $20.5 billion set by the finance ministry. The country’s current account deficit would touch $8.3 billion (2.7 percent of the GDP) during ongoing fiscal year due to the higher trade deficit. The trade deficit is increasing due to ever increase in imports and continuous decline in exports.

The monthly import bill in April alone stood at $5 billion. Pakistan’s imports would exceed $50b for the first time in its history during current financial year. “The imports however continued to grow at a much faster rate and grew by a large percentage of 18.7. The surge in imports is mainly due to capital goods (machinery, metals etc.), which would eventually increase the country’s industrial capacity and help exports flourish in the coming years,” the government stated in latest Economic Survey 2016-17. The increase in machinery group is mainly due to power generation equipment, corresponding CPEC related activity in power and infrastructure development.

Pakistan’s exports have been declining for the third consecutive year in a row due to decline in commodity prices coupled with economic slowdown in exports markets. The structural problems like low productivity owing to poor quality of human resource at design and quality of stages, an inward looking protective tariff regime and general lack of competitiveness in the business firms are the major factors in this regard. Exports are hamstrung due to disconnect between domestic competitiveness and international trade competitiveness.

The PBS data showed that Pakistan’s exports have declined by 10.95 percent to $1.63 billion in May 2017 from $1.83 billion of May 2016. However, the imports recorded an increase of 27.88 percent and reached $5 billion in May 2017 from $3.982 billion in the same period of the last year. Therefore, the trade deficit was recorded at $3.47 billion in May 2017 as against $2.16 billion of May 2016, showing a growth of 60.79 percent.