Trade deficit widens to record $43.33bn in July-May FY22

ISLAMABAD: Trade deficit has widened to a record $43.33 billion in July-May period of the current fiscal year on sky-high oil import bill, an official data showed on Thursday, which may worsen the country’s current account balance and further weaken the rupee.

Analysts said higher crude, petroleum products, edible oil, and other commodities prices in the international market widened the trade balance, though growth in exports was reasonably good during the year, but still, it has far less potential to reduce trade imbalances.

The first 11 months of fiscal 2021/22 witnessed deficit of $15.88 billion or 57.85 percent higher than the $27.45 billion the economy racked up in the same period a year ago.

Imports surged to a whopping $72.18 billion while exports were at $28.848 billion in July-May period. The imports were 60 percent more than exports, the Pakistan Bureau of Statistics (PBS) reported. In the same period last fiscal, imports were at $50 billion and exports at $22.576 billion. This depicts a 27.8 percent growth in exports and a 44.3 percent increase in imports.

Goods exports in May 2022 picked up 55.66 percent to $2.6 billion from $1.67 billion in the corresponding month a year ago, while imports rose by 25.4 percent to $6.64 billion from $5.297 billion in May 2021. The trade deficit in May 2022 swelled 11.5 percent to $4.04 billion from $3.63 billion in the same month a year ago.

Comparing trade performance with the previous month, goods exports in May 2022 were down 10.2 percent from $2.897 billion in April 2022. Imports during May 2022 were down by half a percent from $6.679 billion in April 2022.

Amid the country’s external financing imbalance, the rupee devaluation did not significantly help boost exports.

During the last fiscal (2020-21) trade deficit stood at $31.1 billion or 34.3 percent higher than the $23.159 billion recorded in FY2019-20. In FY2021, imports clocked in at $56.405 billion and exports $25.30 billion.

During FY2020, the exports hit $21.39 billion, while imports came in at $44.55 billion, a deficit of $23.159 billion.

The PBS also reported the services trade statistics for the first ten-month period (July-April 2021/22). During the period, the local companies hired more services from other countries than they provided to them.

The services trade deficit increased 71 percent to $3.58 billion in the period under review from $2.1 billion in the same period of FY2021. The economy hired foreign companies’ services for $9.37 billion while selling its services abroad for $5.79 billion. In the same period of FY2020, the services exports (money inflow) stood at $4.9 billion, and imports (outflow) were recorded at $6.99 billion. This represents an increase of 18.2 percent in exports and 34 percent in imports of services.

In April 2022, services exports stood at $627 million and imports at $1.01 billion indicating a deficit of $387 million. In the previous month of March 2022, exports were recorded at $674 million and imports at $948 million, with a deficit of $274 million. In the month, exports went down 6.98 percent and imports increased by 6.96 percent compared to the previous month.

Comparing April 2022’s services trade performance with the same month of the last year, exports jumped 27.16 percent, and imports also surged 58.17 percent. In April 2021, services exports stood at $493 million and imports at $641million, with a deficit of $147.96 million.

Comparing both the months, the deficit increased by 161.5 percent in April 2022 over a year ago.