Trade deficit

During the 10 months period – from July to April – of the current financial year, the country’s current account deficit has risen to an alarming amount of $ 7.2 billion which is 200 percent higher than the last year’s same period. The continuous surge in the country’s imports month after month is resulting into unprecedented trade account deficit which, in turn, is causing dangerous current account deficit. The country’s trade deficit has been increasing at an alarming speed since the beginning of the current financial year, but the authorities have not found out a way to tackle the serious problem. Officials responsible for maintaining healthy balance sheet of the country have not spoken a word so far on the deteriorating current account deficits. The deficit might take us back to the doors of the IMF. Some media reports suggest that huge machinery import is causing the trade account deficit and that once the imported machinery is installed and gears into production, country’s exports will increase which will eventually bring down the trade account balance to a satisfactory level.

We have been reading this unconvincing argument since a long time. How long this cycle of importing machinery, installing and going into production will take? This situation has been going on since a very long time. It is high time the country’s economic managers took the matter of alarmingly high trade deficit seriously and came out with a detail analysis of what actually is causing the deficit and what steps should be taken to tackle the situation.

Ejaz Ahmad Magoon

Lahore