KARACHI - The crisis-hit economy of Pakistan would move towards the path of recovery from December 2008. The foreign exchange reserves would improve from next month after the disbursement of the first tranche of the IMF loan while the trade deficit of the country would also start nose-diving from December as a result of a massive decline in the prices of international crude oil and other commodities. Sources in State Bank of Pakistan and private sector said that the impact of cut in world oil prices is being observed from the current month and it would also be reflected next month when the fresh data of the foreign trade would be available. The Opec crude oil prices have tumbled from a record high of 148 dollars per barrel in July this year to slightly below 50 dollars a barrel during the past few weeks, said sources, adding this substantial relief in oil prices would not only squeeze the oil imports bill by around US$2-3 billion in FY09, but also trim the size of the trade deficit and the current account deficit as well. In last financial year the current account deficit remained little over US$14 billion while the trade deficit mounted to US$19.90 billion, the highest-ever, mainly because of the record high prices of oil, other commodities and about 34 per cent overall growth in imports. Sources said that the prices of oil, fertilizers, wheat and other commodities have declined significantly during the past couple of months that would lead to an impressive decline in the deficit and the imports bill in this fiscal. They also said that the central bank's decision of raising the discount rate to 15 per cent and depreciation of Pak-rupee against major currencies would also discourage the people to import luxury and non-essential items. They pointed out that in August this year the federal government and the SBP took some measures to put barriers before the unprecedented growth in imports and the recent decision of hike in discount rate would also work as a speed-breaker for the growth of imports. In first four months of this fiscal the imports reflected 24.86 per cent growth, to 14.28 billion dollars from 11.44 billion dollars in the same months of last fiscal. However, in the month of October 2008 the imports showed only 2.45 per cent increase and amounted to 3.46 billion dollars which indicates that in the coming months the imports growth decelerate and may turn into negative growth, as envisaged in the budget, leading to relief in the imports bill and deficits. According to sources, the foreign exchange reserves, trade and current account deficits are expected to show improvement from December this year while the stock market is also expected to move towards upside. Because after the approval of the IMF programme, the next target of the PPP government would to ensure a smooth sailing of the stock market by enforcing the strategy jointly evolved by the economic team and the KSE key stakeholders, they said. Before stabilizing the stock market the federal government wanted to ensure the approval of the IMF programme so that the country may not face the danger of default, they added. They said that the Friends of Pakistan's support in terms of projects financing, involving billions of dollars would also accelerate the economic recovery and improve the confidence of the foreign investors.