Trade deficit enlarges to $18.75b mark in 11 months

KARACHI - The trade deficit of the country enlarged to an unbelievable mark of 18.756 billion dollars in first 11 months of the current financial year.

The trade deficit is higher by 52.35 per cent or 6.445 billion dollars when matched with such deficit in last fiscal during July-May period, when it stood at 12.311 billion dollars. The trade imbalance is double than the liquid foreign exchange reserves with the State Bank of Pakistan (less than 10 billion dollars).

The exports have marked 11.37 per cent growth from July-May FY08 and settled at 17.186b dollars as against 15.432b dollars in the same period of FY07. In 2006-07, the trade deficit of the country stood around $13.40b only.

The imports, however, showed 29.56 per cent increase and stayed at 35.943 billion dollars vis-a-vis 27.743 billion dollars in 11 months of the previous fiscal year.

In rupees, the exports showed 14.47 per cent growth in 11 months of this fiscal while the imports reflected 33.25 per cent growth and the trade deficit exhibited 56.77 per cent increase.

In May 2008, the exports showed 22.81 per cent increase and amounted to 1.946 billion dollars as against 1.584 billion dollars in the same month last year. The imports last month surged by 41.22 per cent and settled at 3.883 billion dollars, from $2.75 billion in May 2007.

According to latest foreign trade update of the Federal Bureau of Statistics for July-May FY08 period, the trade deficit in May this year had mounted to 1.937 billion dollars, from 1.165 billion dollars in May last year.

Interesting to mention is that the current account deficit of Pakistan had widened to beyond 12 billion dollars in 10 months of the outgoing financial year mainly because of an unprecedented growth in the trade deficit and less than projected inflows of the foreign exchange. Resultantly, the foreign exchange reserves of the country, which hit the highest mark of 16.40 billion dollars in October 2007, have gradually depleted to below 12 billion dollars this month. The trade deficit and the imports have breached the budgetary projections as the federal government had anticipated deficit around 16 billion dollars and imports around 32 billion dollars.

The overall trade deficit of Pakistan in FY08 is expected to be well over 20 billion dollars by June 2008 as the monthly trade deficit had been hovering around two billion dollars mark during the past few months.