Trade gap shrinks: 31pc on low imports in first half

ISLAMABAD: Trade deficit during first half of the fiscal year 2019/20 shrank 31 percent to $11.64 billion, compared to $16.97 billion in the same period last fiscal, mainly because of a slump in imports, the latest data showed.

Pakistan’s exports improved 3.2 percent to $11.54 billion during July-December 2019/20, while imports squeezed 17 percent to $23.18 billion, signaling towards improving balance of payment position down the line.

Over the last several years, ballooning trade deficit has affected Pakistan’s economy on external front, as it, being a major part of the current account deficit (CAD) had led to imbalance in the situation, resulting in increased dollar outflows that pressured the rupee into shedding its value against the greenback.

It is worth mentioning that the second phase of China-Pakistan Free Trade Agreement (CPFTA) has also come into effect from the start of this month allowing imports of around 313 new Pakistani products on zero duty to the Chinese market. Economists and traders believe it would also benefit the economy the most.

Already, Pakistan is enjoying zero duty on exports of 724 products to China under the first FTA signed between the two countries in 2006. After the implementation of the second FTA, Pakistan has been allowed to export a total of 1,047 products to China on zero duty.

The new facility will particularly benefit the textile sector to enhance its export to China as textile exports to China will virtually be duty-free. There are a number of other items particularly leather and agriculture products as well as confectionery and biscuits etc, which Pakistani manufacturers can export to China.

After this agreement, Pakistan can enhance its exports to China up to $10 billion in the next few years as the volume of the Chinese import market is around $64 billion. The State Bank of Pakistan has also increased funds limits for the traders and manufacturers under export refinance scheme, which will help increase the exports.