Trade deficit widens by 28.6pc to $15b in 5 months
ISLAMABAD – Pakistan’s trade deficit swelled to $15 billion in just five months, putting further pressure on the foreign exchange reserves.
The country’s trade deficit was recorded at $15 billion during five months (July to November) of the current fiscal year as compared to $11.7 billion of the same period of last year, showing an increase of 28.6 percent. Trade deficit is widening due to higher growth in imports as against the exports of the country, data of Pakistan Bureau of Statistics (PBS) suggested on Monday.
Pakistan’s exports were recorded at $9 billion during July-November of the year 2017-18 as compared to $8.2 billion of the corresponding period of the last year, showing a growth of 10.49 percent. Meanwhile, the imports showed double growth than exports, as they went up by 21.1 percent and were recorded at $24.1 billion during first five months of the current financial year as against $19.9 billion of the same period last year.
The increase in trade deficit is putting further pressure on the foreign exchange reserves of the country. Currently, the foreign currency reserves held by State Bank of Pakistan (SBP) stand in the range of $15 billion after $2.5 billion were received through bonds in the first week of December 2017. The reserves are under pressure due to widening of current account deficit, which surged by 122 percent to $5.013 billion in the first four months (July-October) of the current fiscal year as compared to $2.259 billion of a year ago. The CAD is widening as higher imports growth offset the improvement in exports. The current account deficit is likely to touch $18 billion by the end of current fiscal year, which would further pressurise the reserves. Pakistan’s foreign exchange reserves had dropped by over $4.5 billion in the past one year due to fast drying up of foreign currency inflows.
The government seems failed in controlling soaring trade deficit of the country despite announcing measures to reduce imports and increasing exports. The Economic Coordination Committee (ECC) of the Cabinet had imposed and enhanced regulatory duty (RD) on around 731 items in a bid to discourage the surge in import bill. However, imports are still increasing.
According to the latest data of Pakistan Bureau of Statistics, Pakistan’s exports enhanced by 12.35 percent to $1.97 billion in November 2017 from $1.76 billion of November 2016. Meanwhile, the imports recorded a growth of 16.48 percent and reached $4.9 billion in November 2017 from $4.2 billion in the same period of the last year. Therefore, the trade deficit was recorded at $2.9 billion in November 2017 as against $2.45 billion of November 2016, showing an increase of 19.44 percent.