Trade deficit narrows 8.9pc in August

ISLAMABAD: Trade deficit narrowed 8.9 percent year-on-year o $1.69 billion in August as exports and imports continued to move on the downward trajectory, official data showed on Friday.

Pakistan Bureau of Statistics (PBS) data showed that trade deficit stood at $1.86 billion in the corresponding month a year earlier.

Exports fell 15 percent to $1.58 billion and imports declined 12 percent to $3.27 billion in August over the same month a year ago.

Exports were falling on the back of rain-related fallouts for weak road and electricity distribution systems. Rains played havoc with the decrepit infrastructure system in Karachi that is the main revenue generating hub for local businesses and the economy as a whole.

The rainfall triggered flooding in main arteries of transportation of goods to upcountry. Port activities came to a grinding halt, while supply chain disruptions brought down the industrial production to approximately half as workforce couldn’t reach the working sites due to transportation imbroglio.

In August, trade deficit remained almost flat compared to $1.68 billion in July. Exports fell 21 percent month-on-month from $2 billion and imports decreased 11.1 percent from $3.68 billion.

In July-August, trade deficit shrank 8.3 percent to $3.38 billion. That was compared with $3.68 billion in the corresponding period a year earlier. Exports declined 4.3 percent to $3.58 billion. That was compared with $3.74 billion. Imports were down 6.3 percent to $6.96 billion, according to the PBS.

The government claimed that trade balance is showing a sign of recovery, but since industrialists attributed the shrinking trade deficit to policies that discourage imports.

The Federation of Pakistan Chambers of Commerce and Industry, the apex trade body based in the country’s financial district, dismayed over levies and duties that make industrial imports expensive. The government has been promoting the policy of curbing nonessential imports to improve balance of payment position through restricting dollar flights from the country since it took over two years back.

But, the policy happens to stand against the industrialisation that much relies on foreign inputs due to lack of import substitutes in the country.

The country has recently started to come back from five-month long lockdown imposed in late March after the outbreak of corona virus. The industrial shutdown weighed down the growth reeling from stabilisation measures that led to decline in growth. The lockdown further led the economy to the negative territory. The growth is expected to post a modest recovery in the current fiscal year.