Irfan Ahmed

Pakistan’s trade deficit has narrowed by a big margin of 17.13% after a long time, making a positive impression on the country’s external sector.

This is because exports are rising exponentially compared to imports, which climbed in July-August compared to the same period of last year.  

According to the Pakistan Bureau of Statistics (PBS), the country’s trade deficit shrank by 17.13% to $6.269 billion in the first two months of the current fiscal year (2022-23), WealthPK reported.   

The country’s exports increased by 3.75% and remained at $4.759 billion in the first two months (July-August) of the current fiscal year 2022-23 compared to $4.587 billion during the same period of the last fiscal year 2021-22.

Imports shrunk by 9.25% in the first two months of the current fiscal year (July-August), reaching $11.028 billion, down from $12.152 billion in the same period of the previous year.  

Source: PBS website/WealthPK research

According to the PBS, the country’s trade deficit widened by 28.89% month-on-month to $3.530 billion in August 2022, against $2.739 billion in July 2022.   

The country’s imports increased by 20.84% in August 2022, to $6.034 billion from $4.993 in July 2022. Furthermore, exports also increased by 11.07% in August 2022 to $2.504 billion from $2.254 billion in July 2022.    

Source: PBS website/WealthPK research

However, on a year-on-year basis, the trade deficit narrowed by 18.48% year-on-year in August 2022 decreasing to $3.530 billion, down from $4.330 billion in August 2021. This is because the exports registered an increase of 11.44% on a year-on-year basis and jumped to $2.504 billion from $2.247 billion.   

The country’s imports witnessed a decrease of 8.26% to $6.034 billion in August 2022 from $6.577 billion in the same month of last year.  

According to economic experts, the recent government-imposed taxes and bans on imported luxury goods, along with increases in exports of local goods, have contributed to shrinking trade balances.   

However, the inflation in the country has reached its peak now and it will decline in the coming months along with imports and trade deficit.

In accordance with the Cabinet’s decision, luxury items can only be imported after meeting the IMF conditions. The ban on the import of luxury goods has been lifted, but high taxes have been imposed in order to narrow the trade deficit.

The falling global oil prices have also helped the trade balance, which has eased pressure on the country's large import bill as a net energy importer, the economic experts said.

In a nutshell, Pakistan has lifted the ban on imported goods and imposed high taxes on the import of luxury commodities as part of an emergency economic plan to stabilise the national economy. The current government has taken these steps to minimise the country's reliance on luxury imports and to move the country forward economically.

Credit : Independent News Pakistan-WealthPk