ISLAMABAD - Country’s trade deficit contracted by 8.75 per cent in the first half (July-December) of the current fiscal year 2013-2014 over the corresponding period of the previous year mainly due to unexpected growth in the exports.

Trade imbalance narrowed to $9.032 billion during July-December period of the year 2013-2014 as compared to $9.898 billion of the same period last year, showed the figures of Pakistan Bureau of Statistics (PBS). The decline is the outcome of a slight increase in export proceeds while imports witnessed a paltry decline. Apart from other reasons, the depreciation of rupee also facilitated exports of goods from the country. Country’s exports rose to $12.639 billion in July-December 2013-2014 period from $12.024 billion in the corresponding period of the previous year, an increase of 5.11 percent. On the other hand, the import bill declined to $21.671 billion in July-December 2013-2014 period from $21.922 billion in the corresponding period of the previous year, decline of 1.14 percent. Therefore, the trade deficit was recorded at $9.032 billion during July-December period.

Pakistan’s exports could potentially increase its share to two percent, which implies additional exports of about $1 billion, as the European Union has approved preferential access of Pakistani made-ups to EU market under the Generalized System of Preferences (GSP) plus, effective from January 2014.

Despite decline in trade imbalance, the country’s current account deficit is deteriorating continuously as it increased by 175 per cent to $1.8 billion mark during the first five months of current fiscal year 2013-14 (FY14). Economists say the deterioration in current account balance is a major threat to the depleting foreign exchange reserves, as every month government is compelled to spend millions of dollars to finance the current account deficit. 

The latest report of State Bank of Pakistan showed a widening of the current account deficit to around $3.2 billion in FY14, after including the impact of inflows under CSF (Coalition Support Fund) from United States and auction of 3G licenses. The report suggested that current account deficit would widen due to pressure on imports, as political tensions in Syria and Libya have caused international oil prices to increase by 6.2 percent since end-June 2013; in addition, the stressful situation in Iraq and Sudan/South Sudan, and its possible implication on oil prices, does not bode well for our trade balance. Furthermore, we do not expect a significant revival in our exports, unless the global economy recovers more robustly, and domestic energy issues are resolved.

MONTHLY STATISTICS

Meanwhile, according to PBS figures, the overall exports growth went up by 26.11 per cent in December 2014 if compared with exports of previous month (November). The country exported goods worth of $2.275 billion in December 2013 against $1.804 billion of November 2013. However, the imports reduced by 2.47 per cent in the period under review over last year, as the country imported goods worth of $3.561 billion during December 2013 as compared to $3.651 billion of November 2013. Therefore, the country’s trade imbalance decreased by 30.37 percent in December 2013. The country’s trade deficit was recoded at $1.286 December 2013 against $1.847 billion of November 2013.

ANNUAL STATISTICS

Meanwhile, according to the PBS figures, exports stood at $2.275 billion in December 2013, which were $1.969 billion in December 2012 and this showed an increase of 15.54 per cent in exports in one year. Imports decreased by 3.02 per cent and were recorded at $3.561 billion in December 2013 against $3.672 billion of December 2012.

The trade deficit for December 2013 against December 2012 decreased by 24.49 percent and was recorded at $1.286 billion.