Trade deficit swells to $19.5bn in July-April as imports outpace exports

ISLAMABAD: The trade deficit ballooned to $19.51 billion in the first 10 months of the current fiscal year of 2023/24, as imports continued to outpace exports, data from the Pakistan Bureau of Statistics (PBS) showed on Thursday.

Exports rose 9.1 percent to $25.28 billion in July-April FY24 from $23.17 billion during the corresponding period in the preceding year, while imports fell 4.1 percent to $44.8 billion from $47.7 billion.

The trade deficit narrowed 17.1 percent compared to the same period last year, but remained a significant drag on the economy. The country's international sales surged by 9.1 percent, reaching $25.28 billion in July-April FY24, up . Conversely, imports witnessed a 4.1 percent decline to $44.8 billion from $47.7 billion.

The ballooning trade deficit over recent years has significantly impacted Pakistan's economy on the external front, disrupting the balance and increasing outflows of dollars, thereby exerting pressure on the rupee. Consequently, the Pakistani currency has depreciated against the US dollar.

During April 2024, exports increased by 10 percent to $2.35 billion over the same month of last year’s exports of $2.135 billion. Notably, this month was the eighth consecutive rise in exports.

However, over March 2024, exports fell by 8.67 percent, as the economy sold abroad products of $2.57 billion. In April, imports were recorded at $4.7 billion as against $4.87 billion in March, down 3.1 percent, while over April 2023 ($2.98 billion), it was up by 58.4 percent.

During the month under review, the trade deficit widened significantly by 180.58 percent on a year-on-year (YoY) basis, reaching $2.374 billion in April 2024. This is compared to $846 million recorded during the same month in 2023.

It is to be noted that average monthly exports over the ten months stand at only $2.528 billion, making it easy to cross the $30 billion mark. Independent economists believe that apart from other factors, the high-interest rate was one of the major instrumental behind sluggish Pakistani exports. They say that due to high-interest rates, Pakistani companies were unable to borrow from banks nor were the banks themselves quick to lend money to them, the reason being the commercial banks’ interest in government papers (PIBs).

Over the last several years, commercial banks have heavily invested in PIBs, while giving a cold shoulder to the investors or companies. The State Bank’s latest figures also indicate that over the last ten months, credit to the private sector has reduced by 80.2 percent (or Rs184.7 billion) and stood at only Rs45.6 billion. Similarly, in FY23, the total advances to the private sector were Rs208.3 billion against Rs1.329 trillion in FY22, depicting a fall of 84.3 percent.