Trade deficit widens 34pc to $31.1bln in FY2021

ISLAMABAD: Trade deficit widened 34.1 percent to $31.1 billion during the last fiscal year of 2021/22 as merchandise exports and imports were seen significantly recovering, according to official data on Saturday.

In July-June, exports of goods rose 18.1 percent to $25.3 billion from $21.4 billion in the preceding fiscal year, while imports of goods increased 26.4 percent to $56.3 billion, Pakistan Bureau of Statistics (PBS) data showed.

PBS data further showed that trade deficit in June sharply expanded 71 percent year-on-year to $3.6 billion. Monthly exports climbed 68.4 percent year-on-year to $2.7 billion and imports jumped 70 percent year-on-year to $6.3 billion.

Month-on-month, trade deficit narrowed 1.2 percent in June compared to $3.6 billion in May with exports increasing 61.1 percent from $1.7 billion and imports rising 18.4 percent from $5.3 billion, according to the PBS. The growth was a considerable shift from downbeat performance of exports and import sectors in FY2020 that was largely affected by global economic slump following coronavirus pandemic.

Exports sector started to show recover due to several domestic and international favourable factors. Aided by low-cost working capital, tax incentives and administrative measures, exporters increased their production to gain access to foreign markets that had seen falling inflows of goods from their trading partners.

Coronavirus-linked lockdowns that began in earlier parts of the year adversely affected the foreign trade as seaborne and air shipments were affected and slowed down. The robust growth can partly be attributed to low base effect in FY2020. Analysts said the country also benefited from diversion of export orders amid economic hegemony tiff between the US and China.

Textile exports are estimated to have reached $15 billion during the last fiscal year, which would be the highest in the country’s history.

In July-May, textile exports have already increased 19 percent to reach an all-time high of $13.7 billion; in rupee terms growth was 21 percent. Pakistan continued to grab more orders because local operations of other regional countries were affected by COVID-19 outbreak, textile exporters said.

The government policies remained favourable to help industries overcome negatives of coronavirus-led muted demand with non-export sector also making strategies to improve their share in the total exports. Exports have potential increase further with sustained improvements in the business environment contributing to export prospects.

Imports that are double than exports are ascribed with industrial demand of machineries and raw materials, although food and fuel imports account for one-third of total imports.