Trade deficit widens 29pc to $15.03bln in July-Nov

KARACHI: Trade deficit widened 29 percent to $15.03 billion in the first five months of the current fiscal year of 2017/18 as import growth outnumbered a surge in exports, government data showed on Monday.

Pakistan Bureau of Statistics (PBS) data showed that exports rose 10.5 percent to $9.03 billion in the July-November period, while imports climbed 21.1 percent to $24.06 billion.

Trade deficit amounted to $11.7 billion in the corresponding period of FY2017 as exports stood at $8.17 billion, while imports were recorded at $19.86 billion.

Exports, after a downward trend in the past couple of years, are showing recovery as government took measures, including provision of tax incentives, to encourage exporters amid much-needed foreign exchange reserves.

Current account deficit amounted to $5.01 billion in the first four months of the fiscal 2017/18 as compared to $2.26 billion in the same period a year earlier.

Though the government managed to raise $2.5 billion through issuance of dollar notes, it has to invoke real growth in exports sector, which accounts for a mere seven percent of GDP.

Currency depreciation is to instill confidence in the export sector.

Rupee lost as much as four percent in a single day trade to currently revolve in the range of Rs108 to Rs110 a dollar – a level that has long been demanding by the International Monetary Fund, traders and analysts.

Rupee devaluation will, however, increase cost of imports as well as debt repayment obligations. Growing imports, which are linked to infrastructure development, helped the economy achieve a decade high growth rate of 5.3 percent in FY2017.

Government set a six percent growth target for FY2018.

The central bank’s monetary policy stance to keep interest rate four-decade low is lending support to growth.

In November, trade deficit swelled 19.4 percent year-on-year to $2.92 billion as exports increased 12.4 percent to $1.97 billion, while imports rose 16.5 percent to $4.9 billion.

Trade deficit shrank 3.9 percent in November over October as exports increased 4.6 percent, while imports decreased 0.63 percent.

Meanwhile, PBS recorded a 4.1 percent rise in exports of services at $1.66 billion in July-October, while imports of services increased 6.2 percent to $3.32 billion.

Trade deficit in services amounted to $1.66 billion, up 8.42 percent in the first four months of the current fiscal 2017/18.

In October, exports of services fell 11.1 percent month-on-month to $400.2 million in October, while imports of services rose 9.6 percent to $816 million.

However, exports of services increased 1.5 percent year-on-year and imports of services rose 6.23 percent in October