ISLAMABAD: Pakistan’s trade deficit has surged by 8.27 percent to $14.96 billion during the first seven months (July – January) of the 2020/2021 fiscal year, propelled by an uptick in import bills following improved economic activities.
Data released by the Pakistan Bureau of Statistics (PBS) on Monday revealed that the trade deficit for the first seven months of the current fiscal year widened from $13.82 billion in the corresponding period of the last fiscal year to $14.96 billion.
The country’s exports, however, showed resilience, marking a 5.53 percent increase to $14.24 billion during the same period, compared to $13.49 billion in the last fiscal year. This positive trend in exports is encouraging and signals a degree of competitiveness in international markets.
Conversely, the import bill of the country recorded a more significant increase, rising by 6.92 percent to $29.20 billion during the seven-month period under review, as compared to $27.31 billion in the same period of the last fiscal year. The surge in imports reflects the increased demand for goods and services, a positive sign for the country’s economic activities.
On a Year on Year (YoY) basis, the trade deficit widened by 21.03 percent to $2.6 billion in January 2021, compared to the deficit of $2.15 billion in the corresponding month of the previous year. This increase can be attributed to a simultaneous growth in both exports and imports.
During the month of January 2021, exports witnessed an 8.11 percent increase, demonstrating the continued strength of Pakistan’s export sector. Import growth was even more pronounced during the same period, registering a substantial 14.85 percent increase. These figures highlight the robustness of economic activities within the country.
The widening trade deficit presents challenges for Pakistan’s economic stability, as it indicates a higher level of dependence on imports. However, the simultaneous growth in exports is a positive aspect that can contribute to mitigating the impact of the trade deficit.
Economic analysts suggest that a focused strategy to boost export-oriented industries and reduce reliance on imports could help address the trade imbalance. Enhancing the competitiveness of locally produced goods, exploring new markets, and implementing trade-friendly policies are among the measures recommended to achieve a more sustainable trade balance.
The government and relevant authorities are urged to closely monitor these trends and consider targeted interventions to support the export sector while managing import levels effectively. Striking a balance between imports and exports is crucial for ensuring the overall economic health of the country and reducing vulnerability to external economic shocks.
