ISLAMABAD-Pakistan’s trade deficit has narrowed by 40.59 percent to $25.79 billion in eleven months (July to May) of the current fiscal year (FY23) mainly due to massive reduction in the country’s imports as against the exports.
The country’s trade imbalance, gap between exports and imports, was recorded at $25.79 billion in July to May period of the year 2022-23 as compared to $43.41 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. 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.
Pakistan’s exports have declined by 12.14 percent to $25.37 billion in eleven months of the ongoing financial year from $28.87 billion in corresponding period of the last year 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 29.22 percent to $51.16 billion in the July to May period of the current fiscal year from $72.8 billion in the same period of the previous year.
According to the PBS, the country’s trade deficit has shrunk by 49.49 percent to $2.089 billion in the month of May 2023 from $4.136 billion in the same period of the last year. Meanwhile, exports have declined 16.69 percent to $2.186 billion in May 2023 from $2.624 billion in May previous year. Similarly, imports have reduced by 36.76 percent to $4.275 billion in May 2023 from $6.76 billion in the same month of the last year.
On a monthly basis, the trade imbalance was recorded at $2.089 billion in May 2023 as compared to $860 million in the previous month (April), showing an increase of 142.91 percent. The data showed that exports have enhanced by 2.29 percent to $2.186 billion in May this year from $2.137 billion in the preceding month of April. Meanwhile, the imports have reduced by 42.62 percent to $4.275 billion from $2.997 billion in the last month.
The ministry of finance in its recent report noted that the current account deficit is expected to remain in sustainable limit. For the remaining months, it is expected that the exports and imports will follow their trend pattern as observed during the second half of CFY. These projections implied an improved balance of trade in goods and services. Remittances decreased by 12.9 percent on a MoM basis and returned to a normal trend after observing a spike in the month of March due to Eid-related factors. It is expected that remittances will increase in coming months due to eid and other improvement in global and domestic environment.
According to BoP data, exports of goods and services declined by 31.6 and 14.8 percent on YoY and MoM basis, respectively. Similarly, imports of goods and services decreased by 38.0 and 5.4 percent on YoY and MoM basis, respectively. However, the trade deficit of goods and services decreased by 45.4 percent on a YoY basis while it increased by 12.5 percent on a MoM basis in April. The Real Effective Exchange Rate stabilized which implies that Pakistan’s inflation differential has been largely compensated by the nominal depreciation of the Pak-Rupee exchange rate.