ISLAMABAD-As the imports declined massively, Pakistan’s trade deficit has shrunk by over 21 percent to $9.209 billion in the first quarter of the current fiscal year.

The country’s trade deficit has recorded at $2.209 billion in July to September of the ongoing financial year as compared to $11.719 billion in the corresponding period of the previous year, showing an increase of 21.42 percent, according to latest data of Pakistan Bureau of Statistics (PBS). 

Pakistan’s imports have shown massive decline of 12.72 percent to $16.334 billion in July to September period of 2022-23 as against $18.715 billion in the same period of the last year. Meanwhile, exports have gone up by slightly 1.84 percent to $7.125 billion in first quarter of current fiscal year from $6.996 billion in same quarter of last year. On monthly basis, the trade deficit has decreased by 19.7 percent in September 2022 as compared to its previous month of August. Trade deficit was recorded at $2.882 billion in September 2022 as against $3.589 billion in August. Imports were recorded at $5.269 billion in September 2022 as against $6.071 billion in the preceding month (August), showing a decrease of 13.21 percent. On the other hand, exports have declined by 3.83 percent to $2.387 billion in September this year from $2.482 billion in August 2022.

The decline in exports despite massive currency depreciation in last few months should be a matter of concern for the government. The ministry of finance in its monthly report had noted that imports would decline and exports would increase. “For the coming months, the baseline scenario is moderation in imports, following a domestic growth slowdown. At the same time, exports would stabilise, helped by a relatively stable REER at historically low levels.” As a result, the trade balance could be expected to improve.

The remittances are expected to stabilise at around current levels. This together with the expected path of the trade balance and other primary and secondary income transactions would guide the current account balance towards further improvement. “But this scenario may be perturbed significantly by the consequences of the recent floods. These may limit export capacity and at the same time require more imports to satisfy the demand for products and harvests foregone,” it noted.

According to the PBS data, on annual basis trade deficit has narrowed by 30.62 percent to $2.882 billion in September 2022 from $4.154 billion in August 2021. Imports and exports both have recorded decrease in September this year as compared to the same month of the last year. The imports have registered negative growth of 19.72 percent to $5.269 billion in September this year from $6.563 billion in the corresponding period of the previous year. Similarly, the exports have also gone down by 0.91 percent to $2.387 billion in September 2022 from $2.409 billion in the same period of the previous year.