July-Dec trade deficit widens 100pc to $24.78bln

KARACHI: Pakistan’s trade deficit widens 100 percent to stand at $24.78 billion during July-December of fiscal year 2021-22, as compared to $12.36 billion in the corresponding half of the last fiscal year, provisional pre-PBS data showed.

The latest official figures about external trade indicated that trade deficit in December 2021 was up 57 percent to $4.1 billion compared to $2.6 billion in the same month last fiscal. The number was down 18 percent against the deficit in November.

The Ministry of Commerce said early indications showed that the growth in imports has started to decrease. “Imports during December 2021 decreased to $6.9 billion as compared to $7.9 billion in November 2021, declining by $1 billion,” the ministry said, adding that the import projection for December 2021 was $6.2 billion.

On year-on-year basis, imports climbed up 37.9 percent to stand at $6.901 billion as compared to $5.005 billion in December 2020.

Pakistan’s exports went up 16.7 percent to $2.761 billion in December 2021, compared to $2.366 billion in the same month last year, showing an increase of almost $400 million, data showed. Export target for the month was $2.8 billion. During the first half of the current fiscal, exports increased by 25 percent to $15.125 billion, as compared to $12.110 billion during July-December 2020. The export target for the first half of this fiscal was $15 billion.

Continuous growth in trade deficit was because of sharp rise in import bill, which might push the current account deficit to $10 billion

Trade deficit had peaked to an all-time high of $37.7 billion in FY18. However, government measures led to a drop to $31.8 billion in FY19 and $23.183 billion in FY20. The trend reversed and trade deficit was recorded at $30.796 billion in FY21.

The trade gap has been widening since December last year, mainly led by exponential growth in imports and comparatively slow growth in exports. The government, in order to curtail rising imports had to raise taxes on luxury items, whereas the central bank has increased the cash margins on various imported items to discourage their imports. A consultative meeting was chaired by Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood to discuss the trade trends in December 2021, where he was informed about the latest indications.

He was briefed that according to the available data there was noticeable product and geographical diversification during December 2021. The exports of fish and fish products, plastics, cement, fruits and vegetables, petroleum products, natural steatite, etc increased.

In terms of market diversification, there was an increase in exports to Bangladesh, Thailand, Sri Lanka, Malaysia, Kazakhstan, South Korea, etc. For traditional sectors, there was increase in the exports of men’s garments, home textiles, rice, women’s garments, jerseys and cardigans and t-shirts.

In response to the query of the aviser, he was informed that in terms of traditional markets, as compared to December 2020, Pakistan’s exports to United States, China, the Netherlands and Spain increased in December 2021, while exports to the United Kingdom, Germany, Afghanistan, Saudi Arabia, the Russian Federation, Indonesia and Czech Republic decreased.

Moreover, the exports of fruits and vegetables, surgical instruments, electrical and electronic equipment, tractors, pearls and precious stones decreased in December 2020, as compared to the same month last year.

Dawood expressed his satisfaction on the growth of exports during the first half of the current fiscal year. He advised the officials of the Ministry of Commerce to monitor export growth so that the momentum was maintained and necessary interventions made if and when necessary.