Trade deficit widens to $5.8bln in July-Sept

ISLAMABAD: Trade deficit widened two percent to $5.8 billion in the first quarter of the current fiscal year of 2020/21 as both exports and imports were seen showing marginal decrease and increase, official data showed on Monday.

Pakistan Bureau of Statistics (PBS) data showed that trade deficit stood at $5.68 billion in the corresponding quarter of the last fiscal year. In July-September, exports fell around one percent to $5.46 billion, while imports rose 0.6 percent to $11.3 billion.

In September, trade deficit sharply expanded 19.5 percent year-on-year and 37.4 percent month-on-month. Trade deficit increased to $2.4 billion from $2 billion in September last year and $1.74 billion in August 2020, according to the PBS.

However, exports and imports were recorded going up in September compared to the same month a year earlier and the preceding month as resumption in economic activities after lifting of lockdown reflected in improving foreign trade during the month.

In September, exports rose 18.2 percent month-on-month to $1.87 billion. Imports increased 28.3 percent month-on-month to $4.26 billion. The government was expecting recovery in exports following gradual ease in restrictions on trade amid the coronavirus pandemic.

In September, exports increased 6.1 percent from $1.77 billion in the same month a year earlier. Imports climbed 13.2 percent from $3.77 billion.

Exports rebounded in September after a double-digit fall in August as lifting of lockdown is leading to clearance of export orders in backlog and economic activities are adjusting to the new normal.

Exports sector showed first recovery in July after consecutive downtrends since March amid coronavirus lockdown. Ease in lockdown paved the way for clearance of orders stuck on ports. Global lockdowns related to coronavirus pandemic upended the world’s economy. Economic activities came to halt and ports were chocked with cargoes unmoved due to slowdown in transportation.

Pakistan’s economy that was already tottering before the coronavirus was further mauled by monthslong lockdown. The growth is expected to recover at 1 to 1.5 percent this fiscal year after contraction in the previous fiscal year.

Exports continued to show contraction since the government took charge. Trade deficit narrowed 27.1 percent to $23.1 billion in the last fiscal year of 2019/20, but the reduction was mainly caused by suppressing imports rather than export sector’s recovery. Exports declined 6.8 percent to $21.3 billion, whereas imports sharply fell 18.6 percent to $44.5 billion during the last fiscal year. The government used to curtail imports and mobilise foreign funds to improve balance of payments position since it took over in August 2018.

However, it revised its import restriction policy by abolishing import duties on 41 percent of industrial raw materials, which are more than 1,600 tariff lines, earlier this month.