ISLAMABAD: During the nine months from January to March, Pakistan’s trade deficit increased by 70% year on year to $35.4 billion because of imports of nearly $60 billion, according to figures released by the Pakistan Bureau of Statistics on Monday.
For the past nine months, the trade imbalance has increased because of extraordinary growth in imports, while exports have remained stagnant at roughly $2.5bn to $2.8bn a month.
During the month of March, the trade imbalance was $3.45 billion, an increase of around 12 percent from February and 5.5 percent over the same month in 2021.
In the 2017-18 fiscal year, the trade imbalance hit a record high of $37.7 billion. It was, however, reduced to $31.8 billion (2018-19) and later to $23.2 billion (2019-20) because of the government’s initiatives.
After then, the pattern changed and the trade deficit increased to $30.8 billion in the 2020-21 fiscal year, where it is predicted to hit an all-time high in the current fiscal year.
There was a 49% increase in the import bill from July to March this fiscal year. The import cost increased by 10% in March alone, from $5.6bn to $6.2bn, compared to the same month last year. In March, imports declined by 2.8 percent on a month-to-month basis.
The government’s efforts to stimulate the importation of raw materials pushed up the import bill. The price of oil has risen because of rising worldwide costs and increased demand at home. Imports of autos, equipment, and vaccinations all saw an uptick. Wheat, sugar, and expensive palm oil are all imported by the government.
The import bill increased by 26 percent to $56 billion in the fiscal year 2020-21 from $44.6 billion in the fiscal year 2019-20.
Exports increased by 25% from July to March, totalling $23.3 billion. Exports increased by 16 percent in March, from $2.36 billion to $2.74 billion. Exports grew by 4.7 percent month-to-month.
In 2020-21, export revenues would rise by 18 percent to $25.3 billion from $21.4 billion in the previous year.
The yearly export aim for commodities is $31.2 billion, while the annual export target for services is $7.5 billion, according to official projections.
“Exports are likely to continue their upward trajectory, underpinned by the export-friendly policies that have been adopted,” said the finance ministry’s March economic report and prognosis, issued last month.
The real effective exchange rate (REER), which evaluates a currency’s value in relation to the currencies of its key trade partners after inflation has been adjusted, was also cited as a boost to exports.
“Imports are likely to rebound to a level more in line with local economic activity and the levels of international commodity prices. As a result, it is possible that the trade balance may be in a better position in March 2022. Although geopolitical dangers remain,” it stated.
As a result of seasonal fluctuations, remittance inflows dropped significantly in January and February. Workers’ remittances, however, were projected to return to normal levels in March, according to the study.
“With these and other variables taken into consideration, the current account deficit in March is likely to remain substantially below the unsustainable levels experienced between August 2020 and January 2022,” it stated.