ISLAMABAD: Pakistan’s trade deficit (exports-import gap) during the first half of this financial year was recorded at $9.87 billion, which was 14 percent less than $11.476 billion in the same period last year, the Pakistan Bureau of Statistics (PBS) Friday reported.
Interestingly, during July-December FY13, exports increased by 7.58 percent to $12.05 billion, while imports dropped by 3.33 percent to $21.92 billion. Last year in the same period, exports stood at $11.20 billion and imports at $22.678 billion.
Independent economists believe that decline in imports and a little increase in exports were due to weak rupee, as it makes Pakistani products less costly attracting world economies to import from Pakistan at comparatively low price. However, for Pakistani importers, it becomes difficult to import foreign products as now they are paying more rupees to import these products. During last one year, Pakistani rupee has shed it value sizably against major trading currencies of the world.
Though to some extent the depreciating rupee supports bridging of trade gap, yet at the same time it also mounts pressure on the country’s external debt and its servicing (i.e. each dollar debt needs more rupees to retire or service it).
Pakistan’s external debt and liabilities at the end of September 2012 stood at an unprecedented $66.24 billion, which is 27.45 percent of country’s GDP, which has been estimated at Rs23.65 trillion or at $241.3 billion (at Rs98 a dollar) for FY13. Keeping in view the impact of rupee depreciation on total debt burden in absolute terms, each rupee increase in dollar vale would cost the economy about more than Rs66.24 billion. The government’s economic policymakers should think about the negative and positive fallouts of currency depreciation on economy, as there is a trade-off between mounting debt burden and reduced trade deficit as a result of weakening rupee. This calls for coordinated efforts of federal government and the central bank.
According to the annual plan 2012-13, the government has projected an export target of $25.812 billion for FY13. However, in first half it has achieved 46.7 percent of the target. Interestingly, the ministry of commerce had to unveil three-year Strategic Trade Policy Framework 2012-2015 in July 2012 with a resolve to boost exports to $30 billion, but still its has not been announced. The country’s first ever three-year STPF 2009-12 has already expired in June 2012.
During December 2012, trade deficit down by 29.25 percent to $1.7 billion against $2.4 billion recorded in December 20011.
During the month under review, economy’s products sold abroad rose by 6.2 percent to $1.97 billion, while it pulled in 13.8 percent less products that amounted to $3.67 billion.
These experts believe that the increasing crude oil price in international market could further put burden on country’s trade deficit. CNG, which feeds cars and other vehicles and its shortage in domestic market, is also one of the catalysts for high oil demand and this balloons imports bill.
Comparing December 2012’s trade activities with the previous month (November), exports were up by 3.85 percent and imports by 1.8 per cent. In November 2012, exports stood at $1.896 billion and imports at $3.607 billion.