Pakistan’s trade deficit marginally contracted to $11.8 billion in the first four months of the current fiscal year on the back of almost flat growth in imports for the fourth consecutive month while the pace of increase in exports remained modest despite numerous rounds of currency depreciation.
The Pakistan Bureau of Statistics (PBS) said the $11.8 billion deficit, recorded in July-October FY19, was nearly 2 per cent or $237 million lesser than in the same period last fiscal, The Express Tribune reported on Friday.
Exports in the July-October period increased 3.52 per cent to $7.3 billion. In absolute terms, the export receipts rose $248 million, but the pace of increase was slower than the preceding year.
The value of imported goods stood at $19.1 billion, which was only 0.6 per cent or $11 million higher than the import bill in the corresponding period of previous fiscal year.
Exports were 261 per cent less than the value of imports. Imports of the country have started to ease due to the State Bank of Pakistan’s (SBP) numerous policy and administrative measures. Additionally, the federal government has imposed heavy regulatory duties on imported goods.
Over the past 10 months, the SBP has let the rupee depreciate by 26.6 per cent to 133.7 against the US dollar in a bid to curtail the current account deficit which is presently Pakistan’s biggest challenge.
Owing to the slowdown in imports, the current account deficit narrowed to $3.7 billion in first quarter (July-September) of the current fiscal year.
However, despite a steep fall in the value of the currency, Pakistani exporters are unable to take full advantage of the situation because of their failure to diversify shipments. The government voices hope that exports will bounce back and register average growth of 18 per cent compared to last year’s level.
China has offered a $1 billion duty-free facility to Pakistan for enhancing its exports. As compared to over $15 billion worth of imports, Pakistan exports only $1.2 billion worth of goods to China, which is not commensurate with the potential. Bilateral trade is regulated under the 2006 Free Trade Agreement.
Pakistan does not have exportable surplus and there is a high probability that the country will avail the $1 billion facility by exporting additional quantity of rice and some other agricultural produce.