ISLAMABAD - Pakistan’s trade deficit has jumped to $43.33 billion in eleven months (July to May) of the current fiscal year mainly due to increase in overall imports as prices of food and oil commodities massively surged in international market.

The country’s trade imbalance, difference between exports and imports, was recorded at $43.33 billion in July to May period of the year 2021-22 as compared to $27.45 billion in corresponding period of the previous year, showing massive growth of 57.85 percent, according to the latest data of Pakistan Bureau of Statistics (PBS). Pakistan’s imports have gone up by 44.28 percent to $72.182 billion in July to May period of FY2021-22 from $50.028 billion in the same period of the previous year. Meanwhile, the country’s exports were recorded at $28.85 billion in July to May period of the year 2021-22 as compared to $22.576 billion in corresponding period of the previous year, showing growth of 27.78 percent. On monthly basis, the trade deficit has increased by 6.9 percent in May 2022 as compared to previous month of April. Trade deficit was recorded at $4.043 billion in May 2022 as against $3.782 billion in previous month of April. Imports were recorded at $6.64 billion in May 2022 as against $6.68 billion in the preceding month (April), showing a decrease of 0.52 percent. On the other hand, exports have also declined by 10.22 percent to $2.601 billion in May this year from $2.897 billion in April 2022. According to the PBS data, trade deficit has widened by 11.5 percent to $4.043 billion in May 2022 from $3.626 billion in May 2021. Imports and exports both have recorded increase in May this year as compared to the same month of the last year. Imports have registered growth of 25.43 percent to $6.64 billion in May this year from $5.297 billion in the corresponding period of the previous year. Similarly, the exports have also shown growth of 55.66 percent to $2.601 billion in May 2022 from $1.671 billion in the same period of the previous year.

On monthly basis, trade deficit has increased by 6.9 per cent in May 2022 as compared to previous month of April

The ministry of finance in its latest report on economic situation of the country has noted that the share of exports of goods and services in total domestic activity demonstrates a positive trend. This is backed by positive economic growth in Pakistan’s main export markets, which are still recovering from the COVID induced economic lockdowns. Additionally, the Real Effective Exchange Rate stabilized at historically lower levels since mid-2021. This implies that Pakistan’s inflation differential has been largely compensated by nominal depreciation of the Rupee exchange rate. According to the ministry of finance, since mid-2021, the share of imports of goods and services in total domestic activity has stabilized at historically high levels. The upward shift in international commodity prices and international inflation in general, played a major role in this development.

For the coming months, it is expected that the import content of domestic growth would subside somewhat, backed by restrictions on unnecessary imports. Furthermore, a slower potential economic growth in the coming months may contain the import bill. On the revenue side, assuming a constant REER, the export content could stabilize at around current levels. These projections imply an improvement in the balance of trade in goods and services. Though the remittances surged in April due to the Eid factor they may return to normal trend in the coming months. Taking into account all other secondary and primary income payments and receipts, the current account deficit is expected to stay well below the 1.0 billion USD mark in the coming months, the report added.