ISLAMABAD-Pakistan’s trade deficit has narrowed by 31.97 percent to $19.6 billion in first seven months (July to January) of the ongoing financial year.
The country’s trade imbalance, gap between exports and imports, was recorded at $19.6 billion in July to January period of the year 2022-23 as compared to $28.9 billion in the same period last year, according to the latest data of Pakistan Bureau of Statistics (PBS). Exports and imports both have reduced in the period under review. Pakistan’s exports have declined by 7.16 percent to $16.5 billion in seven months of the ongoing financial year from $17.7 billion in corresponding period of the last year despite massive currency depreciation and relief package for the exports oriented sectors. On the other hand, imports have also fallen by 22.5 percent to $36.1 billion in July to January period of the current fiscal year from $46.6 billion in the same period of the previous year.
According to the PBS, the country’s trade deficit has shrunk by 22.71 percent to $2.6 billion in the month of January from $3.4 billion in the same period of the last year. Meanwhile, exports have declined 15.42 percent to $2.2 billion in January 2023 from $2.6 billion in January previous year. Similarly, imports have reduced by 19.55 percent to $4.9 billion in January 2023 from $6.036 billion in same month of the last year.
On monthly basis, the trade imbalance was recorded at $2.6 billion in January 2023 as compared to $2.8 billion in previous month (December), showing decline of 6.9 percent. The data showed that exports have declined by 4.41 percent to $2.2 billion in January this year from $2.3 billion in the preceding month of December. Meanwhile, the imports have also reduced by 5.78 percent to $4.9 billion from $5.2 billion in the last month.
The government has successfully reduced the trade deficit, which is helping in controlling current account deficit to avert pressure on depleting foreign exchange reserves of the country. The country’s foreign exchange reserves have fallen to an alarming level. “During the week ended on 20-Jan-2023, SBP’s reserves decreased by $923 million to $3,678.4 million due to external debt repayments,” said State Bank of Pakistan. The total liquid foreign reserves held by the country stood at $9.453 billion as of 20-Jan-2023. Foreign reserves held by the State Bank of Pakistan are $3,678 billion and net foreign reserves held by commercial banks are $5,774 billion. The reserves are declining due to the repayment against previous loans. According to the latest report of the ministry of finance, exports are constrained by domestic production issues related to the slowdown of demand in the main export markets and high domestic production costs. Imports are currently constrained by sluggish domestic demand and administrative measures to protect the official foreign reserves level. Since no immediate reversal of these developments is envisaged, the trade balance may further stabilize or further improve somewhat in the upcoming months.
The current account balance slightly deteriorated in the month of December. This was mainly due to an increase in primary income payments and a decrease in remittances. It is expected that in January these payments would return to normal levels. Together with the expected improvement in the trade balance due to prudent government measures, the current account deficit may decline in January and stabilize during second half of FY2023.