Trade deficit narrows 35.9 percent to $3.9bln in July-August

KARACHI: Trade deficit sharply narrowed 35.86 percent year-on-year to $3.924 billion in the first two months of the current fiscal year of 2019/20 as imports considerably decreased on regulatory measures and slowdown in oil shipments, but exports slightly increased during the period, official data showed on Friday.

In July-August, imports fell 21.41 percent year-on-year to $7.677 billion, while exports rose 2.79 percent to $3.753 billion, Pakistan Bureau of Statistics (PBS) data showed.

In August, trade deficit contracted 38.98 percent year-on-year to $1.799 billion with both imports and exports down 26.26 percent and 7.65 percent, respectively. Compared with July, trade deficit shrank 15.34 percent in August as imports fell 8.98 percent and exports decreased 1.85 percent.

PBS data showed that oil imports fell 26.75 percent to $1.935 billion in the July-August period as imports of crude and petroleum products, in terms of volume, dropped 46.36 percent and 7.84 percent, respectively.

Except machinery, all other key import groups showed downward trend to give a respite to the current account deficit that noticeably contracted to 2.8 percent of GDP in July-August from 5.5 percent of GDP in the corresponding period a year earlier.

Machinery imports scaled up 8.23 percent from $1.591 billion in the July-August period of the last fiscal year. Food imports fell 26.81 percent year-on-year to $697.340 million in two months. Imports under transport group declined 35.93 percent to $320.054 million. Imports of fertiliser and agricultural chemicals decreased 23.31 percent to $1.231 billion. Metal imports fell 25.95 percent to $686.484 million in the period under review.

The government has taken a score of regulatory and administrative measures, including exchange rate adjustments and high import tariffs, to curtail imports.

Export sector, however, is still struggling to support the external account as outbound shipments staggered to climb despite rupee devaluation.

Analysts said settlement of refunds of exporters is likely to help exports rebound.

Value-added sector, however, showed a little sign of recovery in the July-August period. Textile exports that contribute more than 60 percent to total exports marginally improved 2.3 percent to $2.303 billion. Knitwear exports, however, increased 12.84 percent to $541.484 million in two months. Readymade garments’ exports increased 7.47 percent to $467.484 million. Bedwear exports rose 1.22 percent to $399.994 million.

PBS data further revealed that food exports rose 14.27 percent year-on-year to $650.257 million in the July-August period due to significant 48.64 percent growth in rice exports. Except wheat, sugar and oil seeds, all other exports under the food group increased during the July-August period.

Wheat exports tapered off 78.28 percent to $10.590 million as the government continued to slap ban on exports of wheat and wheat flour to control price hike in the country.

Sugar exports also fell 66.03 percent to $17.352 million during the period under review. Leather sector’s exports increased 5.88 percent to $90.543 million in the July-August period.