Trade Deficit Decreases as Exports Grow More Than Imports – Research Snipers

Trade Deficit Decreases as Exports Grow More Than Imports

trade deficit

Pakistan’s trade deficit decreased to $6.2 billion in the first two months of the present financial year owing to the increasing pace of exports in comparison to the imports. This shrinkage reveals that the administrative measures that the government adapted have started to give results.

According to the reports of the Pakistan Bureau of Statistics, the trade deficit for the span July-August was 1.3 per cent which is lower than the deficit recorded in the same timeframe of the last financial year.

The deficit was $78 million lesser than the deficit of the same period last year.

The exports in July-August FY19 hiked by 5.1 per cent to $3.7 billion. In definite terms, the export receipts were $176 million more than the amount of the same period last year.

Imports were recorded at $9.83 billion which was only 1 per cent or $98 million more than the import bill in the same period of the last fiscal year.

The State Bank of Pakistan since the December 2017 has let the rupee to depreciate against the US dollar by around 14.9 per cent to rupees 123.93 to a dollar.

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The central bank has also extended the list of non-essential items to five hundred and thirty-five for which 100 per cent Letter of Credit (LC) margin is needed. It also put bars on advance payments and imports funded from open accounts. All these steps were taken to hold the import bill.

There are also new limitations introduced on the bulk movement of foreign currency within Pakistan targeted at keeping the flow of dollars under scrutiny.

The new government of Pakistan Tehreek-e-Insaf (PTI) is also in the process of finalising the measures that need to be taken for increasing the exports and curbing the increasing import bill.

As per sources, the government is expecting that the new steps would result in more than 18 per cent rise in exports to $29.4 billion in the present financial year.

The federal government is also making plans to let the rupee weaken by another 9 per cent for enhancing the additional customs duty rate and raise the regulatory duty for cutting the import bill to $58 billion.

If all these steps get successful, it would curb the present account deficit to below $14 billion in the present financial year, which otherwise is expected to broaden to $18.5 billion, as per sources.

Pakistan would be needing nearly $31 billion in the present financial year for meeting its external financing needs, which include the debt repayment obligations of $11.1 billion.

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