Islamabad, November 1, 2024 – Pakistan’s trade deficit narrowed by 5.59% during the first four months (July-October) of the fiscal year 2024-25, according to the latest data from the Pakistan Bureau of Statistics (PBS). The trade deficit stood at $6.97 billion, a significant reduction from $7.39 billion recorded during the same period last year, signaling a positive shift in the country’s trade balance.
This contraction in the trade deficit is attributed primarily to a notable increase in exports alongside moderate import growth. The PBS report reveals that Pakistan’s exports surged by 13.45% year-on-year, reaching $10.88 billion for the July-October period, compared to $9.59 billion in the corresponding period of the previous fiscal year. This export growth, driven by improved demand in key markets, has bolstered Pakistan’s overall trade performance.
Simultaneously, imports expanded by a modest 5.17%, totaling $17.85 billion in the initial four months of FY25, compared to $16.98 billion in the previous fiscal year’s corresponding period. The tempered growth in imports suggests a cautious approach towards managing external expenditures, which has contributed to the improvement in the trade balance.
On a month-on-month (MoM) basis, the trade deficit contracted by an even more pronounced 17.69% in October 2024, with the deficit recorded at $1.50 billion compared to $1.82 billion in September 2024. Exports rose by 4.9% from the previous month, reflecting sustained external demand and strong performance across several key sectors. Conversely, imports declined by 3.93% in October on a MoM basis, indicating an intentional curtailment of non-essential imports to stabilize the trade deficit.
Year-on-year (YoY) analysis of October alone reveals an even sharper reduction in the trade deficit, which shrank by 31% compared to October 2023. Exports during October 2024 saw a 10.64% increase from the previous year, while imports declined by 8.02%, further supporting the deficit reduction.
This substantial YoY contraction in the trade deficit underscores the effectiveness of recent fiscal measures aimed at supporting exports and regulating import growth. Analysts believe this trend may persist if exports continue on an upward trajectory and if imports are managed carefully. Improved trade dynamics could relieve some pressure on Pakistan’s foreign exchange reserves and enhance economic stability.
As Pakistan navigates its economic challenges, the shrinking trade deficit offers a glimmer of hope. If sustained, this trend may contribute to a more robust and balanced economic outlook in the months ahead.
