Trade deficit shrinks 30pc in July-Nov on weak imports

ISLAMABAD: Trade deficit fell by 30.14 percent to $14.4 billion in the first five months of the current fiscal year 2022-23, helped by a slowdown in non-essential imports.

Imports in July-November period shrank by 20.15 percent to $26.34 billion from $32.98 billion in the same period last year. At the same time, exports were also down by 3.5 percent to $11.93 billion against $12.36 billion in the same period last year, the Pakistan Bureau of Statistics (PBS) monthly trade bulletin said Thursday.

In November 2022, Pakistan imported 33.6 percent fewer goods and sold 18.3 percent less products abroad compared to the corresponding month of the last fiscal. Exports in November 2022 were down 18.34 percent to $2.37 billion from $2.9 billion in the same month a year ago, while imports dropped 33.6 percent to $5.245 billion from $7.9 billion in November 2021.

During the month, the trade deficit was narrowed by 42.46 percent to $2.88 billion from $4.99 billion in the same month last year. It is encouraging that the imports have been trending downwards since the start of the current fiscal year as in July imports contracted 10.4 percent, in August 7.7 percent, in September 19.7 percent, October 27.2 percent and now in November, they decreased 33.6 percent over their respective corresponding months of last year, the statistical office’s trade bulletin revealed.

Comparing monthly trade performance with the previous month (October), goods exports in November 2022 fell 0.63 percent from $2.38 billion in the previous month, while imports increased 11.34 percent compared to October’s imports of $4.7 billion.

Experts say exports may not touch even the $29 billion mark in the current fiscal year. So far in five months, the average monthly exports are $2.386 billion. Apart from the slowdown of world economies, local constraints were also affecting export growth. Political instability and some economic policies including costly bank financing, rupee devaluation, and expensive input costs were the major factors.

It is to be noted that in the last fiscal (FY22), the economy accumulated a historic high trade deficit of $48.38 billion, recording over a 31 percent increase over the previous year.

Trade in Services

The PBS also issued the economy’s performance of trade in services with other countries. From July to October 2022, the services trade deficit slashed by 38 percent to $812 million against $1.31 billion a year ago. During these four months, services exports increased by 3.97 percent to $2.26 billion and imports were down by 11.8 percent to $3.1 billion.

In October 2022, services exports increased by 1.14 percent to $559 million while imports slashed by 26 percent to $730 million against exports of $553 million and imports of $986 million in October 2021. The services traded deficit declined by 60.55 percent to $171 million in October 2022 against $433 million in Oct 2021.

Over the previous month, exports declined by 2.1 percent and imports by 1 percent. In the previous month (September 2022), Pakistan earned $571 million by selling its services abroad, while local firms hired services worth $737 million from overseas, recording a $166 million deficit.