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Trade deficit widens 41.8pc to $2.1 billion in April

Business

May 6, 2020

ISLAMABAD: Trade deficit widened 41.8 percent in April over March as exports saw a double-digit decline during the month in the coronavirus tumult with foreign orders put on hold, while lockdown badly hampered the industrial production.

In April, trade deficit stood at $2.1 billion compared to $1.5 billion in March, Pakistan Bureau of Statistics (PBS) data showed on Tuesday.

Exports slumped 47.2 percent to $957 million during the month. That was compared with $1.8 billion in the preceding month. Imports also fell 6.8 percent to $3 billion in April. That was compared with $3.3 billion in March.

Since the government announced lockdown late March to prevent local transmission of the coronavirus, economic activities have been barely buzzing with industrial production scaling down. Ports remained partly operational as lack of transportation upcountry caused congestion of non-cleared consignments on the ports.

Besides, exporters are facing declining demand in overseas markets and problems in executing existing orders.

PBS data further showed that exports dipped 54.1 percent year-on-year in April from $2.1 billion in the corresponding month a year earlier. In April, imports also fell 34.5 percent year-on-year from $4.7 billion a year ago. The sharp drop also came from the similar reason of lockdown as port operation remained in lurch throughout the month.

Trade deficit during the month amounted to $2.1 billion compared to $2.6 billion in the corresponding month a year earlier, depicting a reduction of 18.8 percent.

In July-April, trade deficit narrowed 25.7 percent to $19.5 billion. That was compared with $26.2 billion in the corresponding period a year earlier. Exports, during the period, amounted to $18.4 billion compared to $19.2 billion, showing a decline of 3.9 percent. Imports stood at $37.9 billion compared to $45.3 billion, showing 16.5 percent decline.

Industry officials said export sector is feared to face the history’s adverse liquidity crisis at least for two months due to difficulties in executing export orders.

Small and medium exporters would fear running out of cash to pay wages to workers, make payment of utilities and operate industries. Exporters have been facing host of problems and the emerging situations like delayed payments of export proceeds and halt of shipments to Europe and US aggravate their liquidity crunch.

The State Bank of Pakistan introduced a scheme to provide financing for wages and salaries expenses for three months from April to June 2020 for businesses which do not layoff their employees for the three months. The mark-up on the loans under the scheme would be up to five percent. Borrowers who are on the active taxpayers list would be able to get loans at a further reduced mark-up rate of four percent.