ISLAMABAD-Pakistan’s trade deficit has shrunk by 41.16 percent to $1.607 billion in the first month (July) of the ongoing financial year (FY24) as both imports and exports have gone down.
The country’s trade imbalance, gap between exports and imports, was recorded at $1.607 billion in July as compared to $2.731 billion in the same period of the last year, according to the latest data of Pakistan Bureau of Statistics (PBS). Exports and imports both have reduced in the period under review. However, imports have fallen more than exports, which have reduced the trade deficit. The federal government and State Bank of Pakistan had imposed conditions on the imports to improve the balance of payment situation. The reduction in the trade deficit would help in controlling the current account deficit, which has recently recorded a surplus. Later, the government withdrew the ban in the last week of June.
Pakistan’s exports have declined by 8.57 percent to $2.057 billion in July 2024 as against $2.25 billion in the same month of the last despite massive currency depreciation. The currency has depreciated by more than Rs100 against the dollar in the last one year. However, the exports have not improved. On the other hand, imports have also fallen by 26.44 percent to $3.664 billion in the previous month of July from $4.981 billion in the same period of the previous year. According to the PBS, on a monthly basis, the trade imbalance was recorded at $1.607 billion in July 2023 as compared to $1.863 billion in the previous month (June), showing a decrease of 13.75 percent. The data showed that exports have declined by 12.68 percent to $2.057 billion in July this year from $2.356 billion in the preceding month of June. Meanwhile, the imports have reduced by 13.15 percent to $3.664 billion from $4.219 billion in the last month.
According to the latest report of the ministry of finance, for FY2024, it is expected that both exports and imports will gradually increase in coming months. Taking other factors into account, the current account deficit will remain at a sustainable limit in FY2024. “Amid the domestic and global scenarios, exports of goods and services as per BOP data in the month of June are on a decreasing trend, which declined by 16.0% and 29% on MoM and YoY basis, respectively. Similarly, declining global commodity prices and domestic economic activities reflected in import numbers, decreased by 17.7% and 54.9% on MoM and YoY basis, respectively. This is also reflected in the contained trade deficit for goods and services. Despite the decline in workers ‘remittances, a significant decline in trade deficit reflected in surplus of current account for last two quarters of FY2023”.