Trade deficit narrows 2pc to $14.5bln in five months

KARACHI: Trade deficit slightly narrowed two percent to $14.5 billion during the first five months of the current fiscal year of 2018/19 as exports inched up, while imports remained flat during the period, official data revealed on Tuesday.

Pakistan Bureau of Statistics (PBS) data showed that trade deficit amounted to $14.8 billion in the July-November period of the last fiscal year.

In July-November, exports marginally improved 1.2 percent year-on-year to $9.1 billion, while imports were a tad down 0.78 percent to $23.6 billion during the period.

Rupee has lost a quarter of its value against the US dollar since December last year, which provides inducement to the exporters to improve their competitiveness.

While rupee fall is increasing profit margins, exporters anticipate loss of foreign orders in days ahead on high cost of raw materials which are mostly imported.

Tax incentives announced in January 2017 also encouraged exporters to market products in the international market. The exports incentives package ended on June this year.

Imports remained flat as regulatory duties discouraged inbound shipments of non-essential goods into the country.

In November, trade deficit shrank 0.25 percent year-on-year and 5.2 percent month-on-month to $2.7 billion.

Exports, during the month, amounted to $1.8 billion, down 6.3 percent year-on-year and decreasing 3.1 percent month-on-month. Imports were also down 2.7 percent year-on-year and 4.4 percent month-on-month to $4.6 billion in November.

PBS data further showed that trade deficit in services significantly narrowed 33.7 percent to one billion dollars in the first four months of the current fiscal year with exports up two percent and imports down 15.4 percent during the period.

In July-October, exports of services rose to $1.76 billion from $1.72 billion and imports of services fell to $2.85 billion from $3.38 billion during the same period a year ago.

In October, trade deficit in services narrowed 49 percent year-on-year and widened 26.9 percent month-on-month to $195 million.

Services export increased 14.2 percent in October from $411.2 million in the corresponding month a year earlier. Exports of services increased 11.9 percent in October from $419.9 million in September.

Services imports decreased 16.2 percent in October from $794 million in the same month a year ago, while imports of services increased 15.9 percent in October from $573.4 million in September, according to the PBS.