ISLAMABAD   -   Pakistan’s trade deficit shrank by 13.62 percent in eleven months of the ongoing fiscal year due to the massive decline in imports. The country’s trade deficit was recorded at $29.21 billion during July to May period of the current fiscal year as compared to $33.81 billion of the corresponding period of the previous year, showing decline of 13.62 percent.

The latest data of Pakistan Bureau of Statistics (PBS) showed that imports had plunged by over 8.5 percent, which helped in contracting the trade deficit. The government had controlled the pace of soaring imports during ongoing fiscal year. The imports have decreased by imposing regulatory duties (RD) on the imports of furnace oil and other luxury items of food and automobile.

Pakistan has imported goods worth of $50.5 billion during July to May period of the year 2018-2019 as against $55.14 billion in the same period of last year. Similarly, the exports have also shown decline, though minor 0.30 percent. Exports were recorded at $21.27 billion during eleven months of the current financial year.

The government’s decision of depreciating currency had failed to boost the country’s exports. The government had also provided cash assistance to major sectors, mainly textile and clothing for increasing the overall exports.

Similarly, the government had also announced to reduce the gas and electricity prices for the exports oriented sectors. However, Pakistan’s exports had reduced by 1.72 percent to $2.1 billion in May this year, which is alarming sign for the economy.

The reduction in exports and imports had narrowed the trade deficit of the country. The trade deficit had reduced by 13.62 percent to $29.21 billion in eleven months of the current financial year from $30.17 billion in the same months of last year.

The reduction in trade deficit would help in controlling current account deficit of the country, which had touched historic $18 billion last year. The reduction in trade deficit is easing the pressure on the country’s foreign exchange reserves. The reserves are under pressure due to massive repayment on previous loans and interest payment.

According to the fresh PBS data, Pakistan’s exports had recorded a negative growth by 1.72 percent and down to $2.1 billion in the month of May 2019 from $2.14 billion of May 2018. Similarly, the imports had recorded decline of 12.8 percent to and reached $5.04 billion in May 2019 from $5.78 billion in the same period of the last year. The trade deficit was recorded at $2.94 billion in May 2019 as against $3.64 billion of May 2018, showing a reduction of 19.31 percent in last one year.

According to the Annual Plan 2019-2020, there is improvement in exports receipts in certain major groups like; textile and petroleum while decline in food, other manufacturing groups and all other items exports offset the positive gains and overall exports declined. Slowdown in economic activities at our certain export destinations has also affected demand side of exports.

On the other hand, the import bill of machinery, textile, transport, food and metal groups declined while agriculture and other chemical and petroleum groups witnessed rise.

The import bill of these two groups ballooned because of rise in import of fertilizer and chemicals for agriculture and petroleum crude and LNG under petroleum group. However, the import bill of other major groups witnessed decline, which led towards overall contraction in the import bill.