By Irfan Ahmed

Pakistan’s trade deficit narrowed down by a big margin of 26.59% during the first four months of the current fiscal, showing a positive sign for the country’s external sector, WealthPK reports.

According to the Pakistan Bureau of Statistics (PBS), the trade deficit of Pakistan dipped to $11.469 billion during the period under review.

The imposition of heavy taxes by the government on luxury goods including mobile phones and vehicles, a decrease in global oil prices, and increasing exports of local goods can be termed the main reasons for the shrinking of the trade deficit.

The exports of various items from Pakistan increased by 0.94% and reached $9.549 billion in the first four months of the current fiscal compared to $9.460 billion during the corresponding period of the previous financial year.

The country’s imports shrank by 16.21% in the first four months of the current fiscal to $21.018 billion from $25.084 billion in the same period the previous year.

Source: PBS website/WealthPk research

According to PBS, the trade deficit of Pakistan shrank by 21.92% on a month-on-month basis and reached $2.265 billion in October 2022 compared to $2.901 billion in September 2022.

Pakistan’s imports decreased by 13.30% in October 2022 to $4.636 billion from $5.347 in September 2022. The exports of the country also decreased by 3.07% in October 2022 to $2.371 billion from $2.446 billion in September 2022.

According to economic experts, a decrease in global oil prices also eased pressure on the country’s large import bill. During the first four months of the current fiscal, sales of petroleum products reduced by 22% on a year-on-year basis to 6.15 million tonnes from 7.85 million tonnes.

The Pakistani rupee also posted a noteworthy recovery and closed at Rs220 against the dollar this month compared to Rs239 against the greenback in September 2022, with the new finance minister’s promise to tame inflation and control the parity, as well as expectations of additional funds for flood relief.

On a year-on-year basis, the trade deficit narrowed by 42% in October 2022 to $2.265 billion from $3.905 billion in the same month of the previous year.

On the other hand, the exports registered a minor increase of 3.75% on a year-on-year basis and jumped from $2.464 billion to $2.371 billion. The country’s imports also witnessed a decrease of 27.21% and reached $4.636 billion in October 2022 from $6.639 billion in the same month of the last year.

Source: PBS website/WealthPk research

The momentum of the economy could not sustain with Moody’s cut Pakistan’s sovereign credit rating from B3 to Caa1 due to increased risks to liquidity and external vulnerability, and a statement from the president of the United States regarding the country’s ability to protect its nuclear assets.

However, the issuance of a clarification by White House spokesperson, approval of a loan worth $1.5 billion by the Asian Development Bank (ADB) for Pakistan and exit of the country from the Grey List of Financial Action Task Force after four years restored the confidence of investors, the business community and international stakeholders in the economy of Pakistan.

As part of an emergency plan to stabilise the national economy, Pakistan has lifted the ban on imported goods and imposed high taxes on the import of luxury commodities. The government has taken these steps to minimise the country’s reliance on luxury imports and to move the country forward economically, according to economic experts with whom WealthPK interacted.

Credit : Independent News Pakistan-WealthPk