Trade deficit crosses $43.33b in outgoing fiscal year

Data acquired from Pakistan Bureau of Statistics (PBS) has revealed that Pakistan’s trade deficit crossed $43 billion in the first 11 months (July-May) of the outgoing fiscal year 2021-22, as the pace of increase in imports was more than the surge in exports due to the sky-high oil import bill.

Analysts fear that a record-high trade deficit may worsen the country’s current account balance and further weaken the rupee. They identified higher crude, petroleum products, edible oil, and other commodities prices in the international market as reasons behind the widening trade balance.

They further mentioned that growth in exports was reasonably good during the year, but it still has far less potential to reduce trade imbalances.

The first 11 months of the outgoing fiscal year witnessed a deficit of $15.88 billion or 57.85% higher than the $27.45 billion the economy racked up in the same period a year ago.

Imports surged to a whopping $72.18 billion while exports were at $28.848 billion in the July-May period. The imports were 60% more than exports, the PBS reported. In the same period last fiscal, imports were at $50 billion and exports at $22.576 billion. This depicts a 27.8% growth in exports and a 44.3% increase in imports.

Goods exports in May 2022 picked up 55.66% to $2.6 billion from $1.67 billion in the corresponding month a year ago, while imports rose by 25.4% to $6.64 billion from $5.297 billion in May 2021. The trade deficit in May 2022 swelled 11.5% to $4.04 billion from $3.63 billion in the same month a year ago.

Comparing trade performance with the previous month, goods exports in May 2022 were down 10.2% from $2.897 billion in April 2022. Imports during May 2022 were down by half a per cent from $6.679 billion in April 2022.

Amid the country’s external financing imbalance, the rupee devaluation did not significantly help boost exports.

It is worth mentioning that during the last fiscal year (2020-21) trade deficit stood at $31.1 billion or 34.3% higher than the $23.159 billion recorded in the fiscal year 2019-20. In FY21, imports clocked in at $56.405 billion and exports $25.30 billion.

During FY20, the exports hit $21.39 billion, while imports came in at $44.55 billion, a deficit of $23.159 billion.

The PBS also reported the services trade statistics for the first ten-month period (July-April 2021-22). During the period, the local companies hired more services from other countries than they provided to them.

The services trade deficit increased 71% to $3.58 billion in the period under review from $2.1 billion in the same period of FY21. The economy hired foreign companies’ services for $9.37 billion while selling its services abroad for $5.79 billion. In the same period of FY20, the services exports (money inflow) stood at $4.9 billion, and imports (outflow) were recorded at $6.99 billion. This represents an increase of 18.2% in exports and 34% in imports of services.