ISLAMABAD - Pakistan's trade deficit has widened to $3.19 billion during July this year despite exports have slightly surpassed the pace of imports.
The country's trade deficit , gap between exports and imports, has increased to $3.19 billion during July 2018 from $3.18 billion of the corresponding period of the last year.
The trade imbalance has shown an increase of 0.31 percent during previous month, according to latest data of Pakistan Bureau of Statistics (PBS) released on Monday.
Pakistan's exports have registered an increase of 1.17 percent and recorded at $1.65 billion during July 2018. Similarly, the imports have risen to $4.84 billion during July showing a growth of 0.6 percent over a last year. Therefore, the trade deficit has recorded at $3.19 billion in last month.
The new government would have to increase exports and reduce imports to control the deficit.
Controlling trade deficit would be one of the major economic challenges for the new government led by Pakistan Tehreek-e-Insaf (PTI).
The previous PML-N government had badly failed to control the trade deficit in its five years tenure. The country's imports had gone to historic $60.9 billion as against $23.3 billion exports making the trade deficit at $37.67 billion in previous fiscal year 2017-18.
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 reserves are currently standing at around $10 billion, enough to cover only two months imports of the country.
"The new government should devise a strategy to enhance the exports to control the trade deficit of the country," said an official of the Ministry of Commerce.
He further said that government could not control the imports by imposing additional customs duty. Pakistan's overall imports consists 24 percent petroleum, machinery 20 percent, industrial raw material (textiles, transports and metal groups) 21 percent; agriculture inputs 15 percent and edible oil 13 percent.
Increasing taxes or duties on aforesaid imported commodities would lead to inflation as well increased cost for exports, he added.
Finance Minister-designate Asad Umar has recently informed the media that PTI led government would reduce the trade deficit by increasing the exports of the country. He vowed to mitigate all those issues holding back exports including Rs 200 billion exporters' refunds stuck in Federal Board of Revenue (FBR) to increase the exports.
The previous government had set exports target at $28 billion for the ongoing fiscal year 2018-19. But at the same time, the import bill is also expected to continue soaring and reach $56.9 billion in the current financial year, implying a trade deficit of $29 billion.
The current account deficit has been projected to be contained at $13.3 billion next year, against deficit of $18 billion in the last year.
According to the PBS, Pakistan's exports have declined by 12.77 percent to $1.65 billion in July 2018 from $1.89 billion of July 2017. Meanwhile, the imports recorded a reduction of 15.03 percent and reached to $4.84 billion in July 2018 from $5.69 billion in the preceding month of the current year.
Therefore, the trade deficit was recorded at $3.19 billion in July 2018 as against $3.81 billion of June 2017, showing n decrease of 16.15 percent.