ISLAMABAD: The country’s trade deficit fell by 34 per cent in the first four months of current fiscal year led by a paltry growth in exports and a double digit decline in imports of non-essential products.
According to data released by the Pakistan Bureau of Statistics (PBS) showed that trade deficit in the first four months dipped to $7.77 billion from $11.69bn over the corresponding period last year, reflecting a decline of $4.19bn or 33.52 per cent.
The trade deficit has been on the declining trend in the ongoing fiscal year mainly due to government’s corrective measures to slow down imports in order to reduce pressures on foreign exchange reserves and slump in overall demand. On a monthly basis, the trade deficit fell by 29.43pc to $2.05bn in October from $2.9bn over the corresponding month last year.
In FY20, the government plans to bring down annual trade gap to $27.476bn by June 2020. In the year 2018-19, the country’s trade deficit narrowed to $31.82bn, registering a decline of 15.33pc. In a tweet, Adviser to PM on Commerce Razak Dawood said the statistics for Jul-Oct indicate annual trade deficit may decrease by $12bn to $19bn in the ongoing fiscal year from $31bn during the last fiscal year. This improvement, coupled with workers’ remittances, will positively address Pakistan’s current account deficit woes.
He said for the first time in last 15 years, exports are rising and imports are decreasing simultaneously. The increase in exports is even more significant in terms of quantities—showing increased production and economic activity in export-oriented sectors, he added.
Dawood said the reduction in trade gap due to sharp drop in imports is in line with the trend of first quarter of 2019-20.This will significantly contribute to reduction in the current account deficit and will save precious foreign exchange.
Data showed imports in the first four months of current fiscal year clocked in at $15.32bn, down 19.21pc from $18.96bn over the corresponding period last year. The decline in value of imported goods in October is 15.14pc to $4.07bn as against $4.8bn over the corresponding month last year. Contrary to this, exports grew by 3.81pc to $7.54bn in July-October, against $7.27bn during the same period last year.
The numbers are discouraging, as exports, which should have grown over the last few months owing to multiple currency depreciations, have failed to pick up. On a month-on-month basis, exports in October were up 6.75pc to $2.02bn from $1.89bn over the corresponding month last year. The government projects exports during the ongoing fiscal year to reach $26.187bn, up from $24.656bn in FY19.
The incumbent government has taken several measures to curtail rising import bill since coming into power in August 2018. In the budget 2019-20, the government reduced cost of raw materials and semi-finished products used in exportable products by exempting them from all customs duties. Government also promised to provide sales tax refund to exports sectors.