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Trade deficit declines by 15.25% from July to May of FY24

As per official data issued on Monday, Pakistan’s trade deficit experienced a 15.25% reduction from $25.6 billion in the same period last fiscal year to $21.7 billion in the July-May period of the current fiscal year. The rupee may stabilise and the nation’s current account balance may be strengthened by this cut.

Pakistan’s foreign sales increased by 10.65% to $28.1 billion in July-May FY24, according to data from the Pakistan Bureau of Statistics (PBS). On the other hand, imports decreased by 2.37% to $49.8 billion from $51 billion. Still, imports were more than 56% higher than exports.

Experts credit the decline in the trade imbalance to lower global prices for edible oil, petroleum products, crude oil, and other commodities as well as respectably strong export growth over the same time frame. Even if imports declined as well, the decline was insufficient to close the difference even more.

The current account deficit for July–April 2023–was $202 million as opposed to $3.92 billion in the previous year, a decrease (reduction) of 94.85%.Recent years have seen a massive increase in the trade deficit, which has had a negative impact on Pakistan’s economy by boosting dollar outflows and upsetting the current account deficit, which has put pressure on the currency. This pressure has lessened, though, as trade performance has slightly improved.

In May 2024, exports reached $2.79 billion, up 27% from $2.197 billion in the same month the previous year. This is the ninth consecutive month that exports have climbed. Also, there was an 18.76% increase in exports compared to April 2024, when $2.35 billion in exports were recorded.

May 2024 imports totaled $4.9 billion, up 13.9% from May 2023’s $4.3 billion and 1.16% above April 2024’s $4.846 billion in imports.

The trade deficit in May 2024 was $2.1 billion year over year (YoY), essentially unchanged from the $2.495 billion recorded in April 2024. In June, when this fiscal year ends, total exports might exceed $30 billion.

The poor performance of Pakistani exports is mostly due to excessive borrowing rates, according to independent economists. They contend that because banks prefer to invest in government papers (PIBs) rather than give credit to businesses, these rates have made it more difficult for enterprises to obtain bank loans.

Credit to the private sector has decreased over the last ten months as a result of commercial banks’ rising investments in principal immersion banks (PIBs) in recent years.

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