ISLAMABAD: The trade deficit has decreased significantly, dropping by 39.6 percent to $23.7 billion during the ten-month period from July to April in 2022-23, official data showed on Tuesday.
It marks a significant improvement compared to the same period in the previous fiscal year, which saw a deficit of $39.3 billion. The Pakistan Bureau of Statistics (PBS) showed that exports fell by 26.7 percent in April 2023, marking a worrisome trend for the country's economy, as exports play a crucial role in supporting its finances.
Over the past seven months, exports have experienced a sharp decline, which can be attributed to various economic challenges that Pakistan is currently facing, including inflation, devaluation of the currency, and political instability.
The government has implemented restrictions on imports to check the ballooning trade deficit due to the dearth of dollars in the country. The monthly trade deficit in April narrowed by 78 percent to $829 million from a year ago when it was recorded at $3.76 billion. In the ten-month period (July-April 2022-23), exports shrank by 11.7 percent to $23.17 billion from $26.25 billion in the corresponding month a year ago, and imports were down by 28.4 percent to $46.89 billion from $65.5 billion recorded in July-April 2021-22.
Likewise, imports were also down by 28.4 percent to $46.89 billion from $65.5 billion recorded in July-April 2021-22. Comparing monthly trade with the previous month (March), goods exports in April 2023 were down by 10.46 percent, while imports were down 22.6 percent.
Over the last ten months, the average monthly exports were at $2.317 billion, compared to last year's average of $2.625 billion, and the average monthly imports were at $4.688 billion against $6.55 billion in FY22.
Due to the poor performance of exports in July-April, it seems unlikely that the economy will reach the $28 billion mark by the end of this fiscal year. Last year's exports were at $31.8 billion. Pakistan is currently facing a balance-of-payments crisis attributed to a substantial trade deficit.
The issue has led to a decline in the country's foreign currency reserves, as well as the devaluation of the Pakistani rupee. Its imports are surpassing its exports, which has become a major contributing factor to this crisis.
In FY22, the trade deficit was at a historic high of $48.38 billion, with imports of $80.18 billion (an average of $6.68 billion per month) and exports at $31.8 billion ($2.65 million per month). In FY2021, exports were $25.3 billion, while imports were at $56.4 billion. Exports increased by 25.6 percent.
