Karachi, September 1, 2023 – Pakistan’s trade deficit has undergone a significant contraction, decreasing by over 40 percent during the first two months of fiscal year 2023-24, according to data released by the Pakistan Bureau of Statistics (PBS) on Friday.
The reduction in the trade deficit can primarily be attributed to a substantial decline in the import bill during this period. However, it is worth noting that the country’s exports have also experienced a decline.
During July and August of the fiscal year 2023-24, Pakistan’s import bill decreased by 26 percent, falling to $8.19 billion compared to $11.03 billion in the corresponding period of the previous fiscal year. This decline in imports suggests a potential slowdown in domestic demand and a decrease in the purchase of foreign goods and services.
Conversely, exports from Pakistan recorded a decline of 6.38 percent during the first two months of the current fiscal year, reaching $4.43 billion, compared to $4.73 billion during the same period in the previous fiscal year. The dip in exports could be attributed to various factors such as global economic conditions, demand fluctuations, and supply chain challenges.
However, it’s worth noting that in August 2023, the trade deficit widened by 30 percent compared to July 2023. In August, the trade deficit stood at $2.12 billion, compared to $1.64 billion in July 2023. This increase was primarily driven by a 21 percent surge in imports, reaching $4.50 billion in August 2023, up from $3.71 billion in the previous month. On the other hand, exports exhibited an improvement in August, rising by 14 percent to $2.36 billion compared to $2.07 billion in July 2023.
The widening trade deficit in August could be indicative of increased economic activity and demand, potentially leading to higher import volumes. This may also suggest some improvement in the country’s export performance.
The evolving trade dynamics will be closely monitored by policymakers and economists, as they could have significant implications for Pakistan’s fiscal health and economic stability in the coming months.