Pakistan’s trade deficit shrinks 35% in first quarter

ISLAMABAD: Pakistan’s trade deficit has narrowed nearly 35% to $5.7 billion in the first quarter due to compression of imports. However, exports are not picking up.

Trade figures that the Pakistan Bureau of Statistics (PBS) released on Friday showed that exports fell in September over the preceding month but marginally increased on an annual basis despite over one-third depreciation of the rupee against the US dollar.

If first-quarter results are taken as a base for the entire year, the year-end prospects remain bleak. The Pakistan Tehreek-e-Insaf (PTI) government may again miss the annual export target until corrective measures are taken to increase monthly shipments far above $2 billion.

Cumulatively, the exports grew 2.8% or just $148 million to $5.5 billion in the July-September quarter of the current fiscal year, reported the PBS. On average, Pakistan exported $1.84 billion worth of goods per month, which did not correspond with the hype created by the China-Pakistan Free Trade Agreement-II concessions and positive impact of currency depreciation.

Overall, the trade deficit, which stood at $8.8 billion in the first quarter of last fiscal year, shrank to $5.7 billion in first three months of the current fiscal year. In absolute terms, there was a reduction of $3.1 billion in the trade deficit and almost the entire reduction came from the import side.

Imports during the period under review dropped 20.5% to $11.2 billion, according to the PBS. In absolute terms, imports contracted $2.9 billion, which provided some relief to the government that was unable to enhance exports.

The International Monetary Fund (IMF) has projected that the trade deficit in the current fiscal year would narrow down to $24.8 billion. The projection is based on 8.2% increase in exports and 4.7% contraction in imports. However, exports have so far grown at a pace of only 2.8% and imports have shrunk over 20%.

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