KARACHI: Pakistan’s trade deficit narrowed down by 2.0 percent to $11.786 billion in the first four months of the current fiscal year – July-October of 2018-19.
Pakistan Bureau of Statistics (PBS) data showed that trade deficit amounted to $12.023 billion in the corresponding period a year earlier. Exports grew 3.5 percent year-on-year to $7.285 billion in the July-October period, while imports remained flat at $19.071 billion during the period.
In October, trade deficit stood at $2.938 billion. The deficit was down 2.4 percent from $3.009 billion in the corresponding month a year earlier. But, it was up 8.7 percent up compared to $2.702 billion in September 2018. PBS data further showed that exports amounted to $1.903 billion in October. They increased 10.15 percent from $1.728 billion in the previous month. Exports also rose 1.17 percent from $1.881 billion in the same month last year.
Imports were recorded at $4.841 billion in October. They soared 9.3 percent from $4.430 billion in the previous month. Imports, however, were slightly down one percent as compared to $4.890 billion in October 2017.
Exports sector got a much-needed boost in the previous government that announced a $1.8 billion of incentives package to arrest decline of outbound shipments. The tax concessions gave sustenance to export-oriented industries that earned the country more than $23.221 billion, up 13.7 percent year-over-year.
The sector continued to reap benefits of incentives package during the current fiscal year with rupee depreciation adding value to the sector’s competitiveness. Rupee lost around 25 percent against the US dollar since the start of December last year. The rupee devaluation, however, failed to address current account woes as foreign exchange reserves fell 42 percent since the start of the year.
Current account deficit widened to $18 billion or 5.7 percent of gross domestic product during the last fiscal year of 2017-18, mainly due to imports-led trade deficit, compared to $12.6 billion or 4.1 percent of GDP in FY2017.
Trade analysts are, however, optimistic that improved competitiveness of export sector, together with Saudi Arabia funds and a possible IMF bailout, would likely to lend support to fragile balance of payments position. Downward trend in imports, during the first four months, rekindled hopes that external sector is expected to get some respite.
The government also extended list of non-essential merchandise whose imports draw regulatory duties to ease pressure on external account. The previous government slapped regulatory duties on the imports, but the measure could not lead to reduction in import bill, which rose 15 percent to $60.867 billion in the last fiscal year of 2017-18.
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