Trade deficit narrows by 40pc to $23.7b in ten months

The country’s trade imbalance, gap between exports and imports, was recorded at $23.7 billion in July to April period of the year 2022-23 as compared to $39.3 billion in the same period last year, according to the latest data of Pakistan Bureau of Statistics (PBS). Exports and imports both have reduced in the period under review. However, imports have fallen more than exports, which reduced the trade deficit. The federal government and State Bank of Pakistan had imposed conditions on the imports to improve the balance of payment situation.

Pakistan’s exports have declined by 11.71 percent to $23.2 billion in ten months of the ongoing financial year from $26.2 billion in corresponding period of the last year despite massive currency depreciation. The currency has depreciated by more than Rs100 against the dollar in the last one year. However, the exports have not improved. On the other hand, imports have also fallen by 28.44 percent to $46.89 billion in the July to April period of the current fiscal year from $65.5 billion in the same period of the previous year.

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According to the PBS, the country’s trade deficit has shrunk by 77.98 percent to $829 million in the month of April 2023 from $3.8 billion in the same period of the last year. Meanwhile, exports have declined 68.68 percent to $2.124 billion in April 2023 from $2.897 billion in April previous year. Similarly, imports have reduced by 55.67 percent to $2.95 billion in April 2023 from $6.66 billion in the same month of the last year. On a monthly basis, the trade imbalance was recorded at $829 million in April 2023 as compared to $1.444 billion in the previous month (March), showing a decline of 42.59 percent. The data showed that exports have declined by 10.46 percent to $2.124 billion in April this year from $2.372 billion in the preceding month of March. Meanwhile, the imports have reduced by 22.62 percent to $2.953 billion from $3.816 billion in the last month.

The massive reduction in the trade deficit would help in improving the current account deficit. The ministry of finance has already projected that the current account deficit would be curtailed in the month of April. Remittances increased by 27 percent monthly to $2.5 billion in March 2023 as compared to $1.99 billion in February 2023, due to improved situation after exchange rate adjustments, Ramazan and Eid factor played an instrumental role to attract higher proceeds. All above favorable factors have been translated into a current account which turned to a surplus of S654 million in the month of March, this is the level observed after November 2020. For the month of April, it is expected that imports will increase somewhat at a higher level as compared to March due to the government decision for some relaxation in pro-growth imports, to stimulate domestic economic activities. However, remittances will remain at the same level as observed in March.

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