Pakistan's trade deficit contracted by over 12% to $24.09 billion during the fiscal year 2023-24 (FY24), driven by a substantial increase in exports and a slight decline in imports, according to data released by the Pakistan Bureau of Statistics (PBS).
This marks a significant improvement from the $27.47 billion deficit recorded in the previous year.
During FY24, Pakistan's exports surged by 10.54%, reaching $30.65 billion, up from $27.72 billion in the previous fiscal year. On the other hand, imports saw a marginal decline of 0.84%, falling to $54.73 billion from $55.19 billion in FY23. Despite the overall annual improvement, experts have raised concerns over the monthly trade figures for June 2024, which indicate a notable increase in imports.
In June 2024, Pakistan's trade deficit widened significantly by 30.39% year-on-year to $2.39 billion, compared to $1.83 billion in June 2023. While exports for the month rose by 7.3% to $2.53 billion from $2.36 billion in June of the previous year, imports increased sharply by 17.43%, climbing to $4.92 billion from $4.2 billion.
Experts attribute this import surge to several factors, including increased demand for raw materials and consumer goods as the economy shows signs of recovery.
Dr Hamid Haroon, an economist, commented, "The spike in imports is a double-edged sword. While it indicates a growing economy with increasing consumer confidence, it also raises concerns about the sustainability of the trade balance. The government needs to focus on boosting local production to reduce dependence on imports."
On a month-on-month basis, the trade deficit in June 2024 rose by 15.13% to $2.39 billion, up from $2.07 billion in May 2024. Exports decreased by 10.92% from $2.84 billion in May, while imports remained relatively stable, increasing by 0.08% from $4.91 billion in the previous month.
Haroon emphasized the need for strategic measures to manage import growth. "The government should implement policies that encourage import substitution and enhance export competitiveness. This includes investing in infrastructure, streamlining regulatory processes, and providing incentives for industries that have export potential," he said.
The data from PBS highlights the complex dynamics of Pakistan's trade landscape. While the overall reduction in the annual trade deficit is a positive development, the rising import figures, particularly in the last month of FY24, underscore the challenges ahead.
The government has acknowledged these concerns and announced plans to support export-oriented industries and explore new markets for Pakistani goods.
In a recent statement, the Ministry of Commerce outlined its strategy to diversify export products and destinations, aiming to sustain export growth and mitigate the impact of fluctuating imports.