Pakistan’s trade deficit worsened to $15.1 billion in the first eight months of the ongoing fiscal year. This is partly because the government failed to exploit opportunities in the shape of a steep decline in global crude oil prices and duty-free status for its exports to the European markets.
The trade bulletin released by the Pakistan Bureau of Statistics on Friday showed the value of imports was more than double the value of exports for the second month in a row.
The trade deficit – gap between exports and imports – widened 4.22% to $15.1 billion from July to February, reported the national data-collecting agency.
The trade deficit was $612 million higher than reported in the comparative period of the last fiscal year. It almost nullified the $728 million gains Pakistan made due to increase in workers’ remittances during July-February.
The PBS would release the details of imports and exports for July-February later. However, the seven-month data showed that the country got a bonanza of $2.9 billion due to reduction in global crude oil prices. Despite the huge benefit, the trade deficit ballooned due to massive decline in exports.
Pakistan is also availing the ‘Generalised System of Preference’ (GSP) Plus scheme from the European Union (EU) that allows it to export a range of products at virtually zero duty to the bloc of 27 nations. Despite this facility, textile exports during the first seven months plunged by over 9% to $7.4 billion.
From July through February, the exports nosedived to $13.87 billion, which were $2.12 billion or 13.3% less than the receipts in the comparative period of the last fiscal year, reported the PBS. A major reason behind the steep fall in exports was the absence of an enabling business environment, as the government has massively increased the cost of doing business by levying numerous indirect taxes.
The PML-N government has so far failed to announce a ‘three-year strategic trade policy framework’ after the last one expired in June 2015.
The imports during July-February period contracted almost 5% to $29 billion. The imports were $1.5 billion less than the comparative period.
On annualised basis, the trade deficit also widened by 6.7% to $1.5 billion in February. It was $95 million higher than the one posted in February last year, according to the PBS. The trade deficit widened due to 4.7% reduction in exports and marginal growth in imports.
On annualised basis, the exports stood at $1.8 billion in February, $89 less than the receipts in comparative period. The imports last month stood at $3.3 billion, which were almost at January’s level.
For this year, the government has set the economic growth target at 5.5%.
