KARACHI: According to provisional figures, Pakistan’s trade deficit has increased by about 100% to $24.78 billion so far in fiscal year 2021-22, compared to $12.36 billion in the corresponding half of the previous fiscal year.
Following the release of the most recent official statistics on international commerce, the trade imbalance in December 2021 increased by 57% to $4.1 billion, compared to $2.6 billion in the same month the previous year. The fact that the monthly deficit was down 18 percent from the previous month’s estimate should not be overlooked, but it is not.
Early indications, according to the Ministry of Commerce, show that the rate of rise in imports has moderated. In December 2021, imports fell to $6.9 billion from $7.9 billion in November 2021, a $1 billion drop, according to the government, which noted that the target for December 2021 imports was $6.2 billion.
Imports increased by 37.9 percent year on year to $6.9 billion in December 2020, from $5.005 billion in the previous month. Meanwhile, according to data, Pakistan’s exports increased 16.7 percent to $2.761 billion in December 2021, up from $2.366 billion in the same month the previous year, representing an increase of about $400 million.
A total of $2.8 billion in exports was targeted for the month.
During the first six months of this fiscal year, exports increased by 25 percent to $15.125 billion, compared to $12.11 billion during the same period the previous year. For the time under consideration, the country’s export target was $15 billion.
Increased import costs have contributed to the continuing rise of the trade deficit, which might cause the current account deficit to exceed $10 billion in the near future.
In fiscal year 2018, the trade imbalance reached an all-time high of $37.7 billion, a record high. Government actions, on the other hand, resulted in a fall in revenue to $31.8 billion in fiscal year 2019 and $23.183 billion in fiscal year 2020. In fiscal year 2020, the trend was reversible, with the trade deficit increasing to $30.796 billion.
Since December of last year, the trade deficit has been growing, owing mostly to an exponential increase in imports and a relatively moderate expansion in exports. In order to rein in increasing imports, the government has levied taxes on luxury commodities, and the central bank has increased the needed cash margins on the import of various items in order to discourage their importation, among other measures.
Abdrazak Dawood, Advisor to the Prime Minister on Commerce and Investment, presided over a consultative meeting in December 2021 to review trade patterns, during which he was updated on the most recent indications of the situation.
On December 20, 2021, he was informed that, based on current statistics, significant product and geographical diversification had happened in his area. Exports of fish products increased, as did exports of plastics, cement, fruits and vegetables, petroleum products, and natural steatite, among other items.
Exports to a number of nations, including Bangladesh, Thailand, Sri Lanka, Malaysia, Kazakhstan, and South Korea, have increased in recent years. Men’s clothing, home textiles, rice, and women’s apparel, jerseys and cardigans, and t-shirts were among the items that saw an increase in exports.
Following an investigation by the adviser, Pakistan’s exports to the United States, China, the Netherlands, and Spain increased in December 2021, while exports to the United Kingdom, Germany, Afghanistan, Saudi Arabia, the Russian Federation, Indonesia, and the Czech Republic decreased during the same month.
Furthermore, when compared to the same month the previous year, exports of fruits and vegetables, medical instruments, electrical and technical equipment, tractors, pearls, and precious stones all decreased in December 2020.
Dawood expressed his delight at the growth in exports that occurred during the first six months of current fiscal year. He urged officials from the Ministry of Commerce to closely monitor export growth in order to ensure that the momentum was sustained and that any interventions were implemented as soon as possible.