Tag: Trade deficit

  • Pakistan’s trade deficit drops 15.25% amid export surge

    Pakistan’s trade deficit drops 15.25% amid export surge

    Pakistan’s trade deficit for the eleven months of fiscal year 2023-24 decreased by 15.25 per cent year-on-year (YoY) to $21.73 billion, compared to $25.64 billion in the same period last fiscal year.

    The trade deficit in May 2024 slightly increased by 0.1 per cent YoY to $2.11 billion, compared to $2.11 billion in May 2023. However, on a monthly basis, the trade deficit dropped by 15.4 per cent compared to April 2024, when it stood at $2.5 billion.

    According to data from the Pakistan Bureau of Statistics (PBS), exports in May surged by 27.1 per cent YoY to $2.79 billion, up from $2.2 billion in May 2023. Monthly exports also showed a notable increase of 18.8 per cent compared to April 2024, which recorded exports at $2.35 billion.

    On the other hand, imports during May 2024 grew by 13.9 per cent YoY, reaching $4.9 billion, compared to $4.3 billion in May 2023. In comparison to April 2024, imports saw a slight uptick of 1.2 per cent month-on-month (MoM), compared to $4.85 billion.

    These figures reflect a mixed trend in Pakistan’s trade dynamics, with a notable reduction in the annual trade deficit but a slight increase in the monthly deficit, driven by a significant surge in exports and a moderate rise in imports.

  • Pakistan’s exports surge by 8.93% to Rs22.91 billion

    Pakistan’s exports surge by 8.93% to Rs22.91 billion

    Pakistan’s export sector has shown a notable surge, with an 8.93 per cent increase recorded in the initial nine months of the current fiscal year (2023–24) compared to the corresponding period in the previous year.

    Data released by the Pakistan Bureau of Statistics (PBS) indicates that exports soared to $22.914 billion from July to March (2023–24), marking a significant rise from the $21.036 billion recorded during the same timeframe in 2022–2023.

    Conversely, imports experienced a decline of 8.65 per cent, dropping to $39.944 billion from $43.724 billion in the previous year.

    This resulted in a notable improvement in the trade deficit, which amounted to $17.030 billion for the first nine months of the current fiscal year, showcasing a substantial decrease of 24.94 per cent from the $22.688 billion recorded during the corresponding period last year.

    Analyzing the performance for March 2024 against March 2023, exports registered a notable uptick of 7.99 per cent on an annual basis, climbing from $2.366 billion to $2.555 billion.

    Conversely, imports surged by 25.86 per cent, reaching $4.726 billion compared to $3.755 billion in March 2023.

    In terms of month-to-month performance, while exports in March 2024 experienced a marginal decline of 1.08 per cent from February 2024’s $2.583 billion, imports demonstrated a noteworthy increase of 9.25 per cent from the $4.326 billion recorded in February 2024, as per PBS data.

    Pakistan, exports, trade deficit, fiscal year 2023–24, economic growth, Pakistan Bureau of Statistics, imports, March 2024, global trade, commerce, trade statistics,

  • PKR gains ground against US dollar, closes at Rs283.26

    PKR gains ground against US dollar, closes at Rs283.26

    The Pakistani rupee (PKR) continued its positive trajectory against the US dollar (USD) for the fourth consecutive session, appreciating by 0.09 per cent in the inter-bank market on Friday.

    According to the State Bank of Pakistan (SBP), the rupee concluded at Rs283.26, reflecting an increase of Re0.25.

    Thursday witnessed a marginal gain in the rupee, settling at Rs283.51 against the US dollar.

    The ongoing optimism is buoyed by the recently released trade figures for November, revealing a noteworthy 13.16 per cent month-over-month (MoM) and a substantial 31.72 per cent year-over-year (YoY) reduction in the trade deficit, amounting to $1.89 billion.

    Export figures exhibited a robust 7.66 per cent YoY surge, reaching $2.57 billion, while imports saw a YoY decline of 14.47 per cent, totaling $4.46 billion.

    On the global front, the US dollar remained near four-month lows on Friday, influenced by the increasing likelihood of US interest rate cuts in the coming year.

    Conversely, the euro and pound found support as their respective central banks reiterated the necessity for sustained higher interest rates.

    Amid an eventful week for central banks, clarity emerged regarding the potential timing of interest rate cuts following Federal Reserve Chair Jerome Powell’s statement during Wednesday’s meeting.

    Powell suggested that the tightening of monetary policy is likely concluding, with discussions about cuts coming “into view.”

    The Fed’s projections imply a 75-basis-point cut next year from the current level, leading to a broad decline of the greenback against its counterparts.

    The dollar index stands at 102.05, not far from the four-month low of 101.76 observed on Thursday, marking a 1.9 per cent decrease and its most significant weekly decline since July.

    Oil prices, a pivotal indicator of currency dynamics, saw an increase on Friday, set to achieve their first weekly rise in two months.

    This positive shift is attributed to a bullish forecast from the International Energy Agency (IEA) regarding oil demand for the upcoming year, coupled with a weaker dollar.

    Brent futures rose by 21 cents to $76.82 a barrel at 0918 GMT, while US West Texas Intermediate (WTI) crude also experienced a 21-cent climb, reaching $71.79.

  • Agricultural boom: Pakistan’s farm exports surge by more than 70%

    Agricultural boom: Pakistan’s farm exports surge by more than 70%

    In October 2023, Pakistan experienced a notable surge in exports, marking a 13.5 per cent increase to reach $2.7 billion, as reported by the Pakistan Business Forum (PBF).  

    Simultaneously, the trade deficit saw a 4.5 per cent reduction during the same period, indicating positive economic developments. 

    Chaudhry Ahmad Jawad, the Vice President of PBF, highlighted the remarkable 73 per cent growth in the agriculture sector for October.  

    Notably, exports of rice and sesame seeds played a pivotal role in this expansion, showcasing a diversification of the country’s export portfolio and underscoring the robustness of the agricultural industry. 

    Jawad emphasised the imperative for Pakistan to boost its service exports, particularly in information and communication technology (ICT), to address the balance of payment deficit.  

    Drawing a comparison with India, he noted India’s remarkable achievement in ICT exports surpassing $140 billion in fiscal year 2022–23, contrasting with Pakistan’s stagnant growth at $2.6 billion in fiscal year 2021–22.  

    The key differentiator, as Jawad pointed out, is the focus on technology and engineering in India over the years, leading to a skilled labour pool. 

    While acknowledging the challenges in the short to medium term, Jawad expressed optimism about Pakistan’s potential for growth in the ICT sector. He suggested addressing the skills gap by offering crash courses to enhance the capabilities of IT graduates. 

    Jawad further underscored concerns raised by IT companies in Pakistan, stating that despite an abundance of talent, the technology sector faces difficulties due to a lack of demand and challenges in remitting money outside Pakistan.  

    He called for government intervention to tackle these issues, pointing to the State Bank of Pakistan’s efforts in 2020 and emphasising the need for ongoing attention to restore confidence. 

    Finally, a PBF official commended the caretaker IT minister’s goal of increasing ICT exports to $10 billion and bringing renowned payment gateways like PayPal and Stripe to Pakistan.  

    However, he raised concerns about existing limitations on exporters’ remittances, urging the finance division to address this critical issue. 

  • More imports, less exports: Pakistan’s trade gap grows in October

    More imports, less exports: Pakistan’s trade gap grows in October

    Recent trade data for Pakistan reveals a monthly trade deficit increase of $0.6 billion, primarily driven by an $0.8 billion surge in imports.

    However, on an annual basis, the trade deficit is gradually shrinking at a modest rate of 4 per cent.

    This is not necessarily negative news, as import restrictions have been lifted as part of the İnternational Monetary Fund (IMF) programme while the economy is experiencing an uptick in demand.

    The encouraging aspect lies in the positive signs displayed by the export sector. The Pakistani rupee (PKR) has depreciated by approximately 35 per cent year-on-year, falling from PKR 220/USD to PKR 280/USD.

    Last year, exporters faced challenges in importing raw materials, machinery, and intermediate goods.

    Consequently, the 14 per cent year-on-year growth in exports, rising from $2.4 billion to $2.7 billion, is a heartening development, provided this trajectory continues.

    Recent measures by the State Bank of Pakistan (SBP) aimed at promoting exports, including competitive gas rates for exporters, reflect a positive intent.

    While industries reliant on gas may require more regionally competitive energy rates, the direction is favorable.

    Moreover, the alignment of open market and interbank exchange rates may encourage a shift from official channels.

    To address Pakistan’s economic challenges, two key corrections are imperative, among many others: increasing tax revenues and enhancing value-added exports.

    Depreciation of the currency alone cannot serve as the sole remedy for stimulating growth.

    To achieve a comprehensive economic framework, it is essential to boost the exports-to-GDP ratio beyond the current 8 per cent.

    This should encourage capitalists to prioritise exports and foreign direct investment (FDI) over property, fixed income, currency, and trading, ensuring sustained double-digit growth over the next five years.

  • Pakistan’s imports drop sharply, leading to 42% reduction in trade deficit

    Pakistan’s imports drop sharply, leading to 42% reduction in trade deficit

    Pakistan’s trade deficit for the first three months of the fiscal year 2023–24 has notably contracted by 42.25 per cent to reach $5.29 billion. This remarkable reduction is primarily attributed to a significant decrease in imports, a direct consequence of carefully administered measures.

    Data released by the Pakistan Bureau of Statistics (PBS) reveals that the trade balance, which represents the difference between exports and imports, stood at a deficit of $5.29 billion for the period spanning July to September 2023–24. This is in stark contrast to the $9.16 billion deficit recorded during the same period in the preceding year.

    Both exports and imports experienced declines in this timeframe, with imports showing a more substantial decrease compared to exports, effectively narrowing the trade deficit. During these three months of 2023–24, Pakistan’s exports contracted by 3.8 per cent to $6.9 billion, despite facing significant currency depreciation when compared to the corresponding period in the previous year.

    Conversely, imports registered a notable decline of 25.4 per cent, totaling $12.19 billion in the July–September period, down from the $16.33 billion recorded in the same period of the previous fiscal year.

    For a more granular view, the PBS reported that in September 2023, Pakistan’s trade deficit further shrank by nearly 48 per cent to $1.489 billion, compared to $2.856 billion during the same month in the previous year. 

    Exports experienced a slight improvement of 1.1 per cent, reaching $2.47 billion in September 2023 compared to $2.44 billion in the same month the previous year, while imports significantly decreased by 25.5 per cent to $3.95 billion from $5.29 billion in the corresponding month last year.

    From a monthly perspective, the trade deficit contracted by 31.5 per cent compared to August 2023, with exports increasing by 4.2 per cent to $2.47 billion in September from $2.37 billion in the preceding month of August. Simultaneously, imports decreased by 12.9 per cent, amounting to $3.95 billion from $4.53 billion in the last month.

  • Pakistan’s merchandise exports dive for ninth consecutive month, drop by 16.69% in May

    Pakistan’s merchandise exports continue to decline for the ninth consecutive month, plunging by 16.69 per cent year-on-year to $2.18 billion in May, according to data released by the Pakistan Bureau of Statistics.

    The downward trend has persisted throughout the first 11 months (July to May) of the 2022-23 fiscal year, with exports experiencing a dip of 12.14 per cent to $25.36 billion compared to $28.87 billion during the same period the previous year.

    The decline in export proceeds can be attributed to a combination of internal and external factors, raising concerns about the potential closure of industrial units, particularly within the textile and clothing sector.

    In line with this, imports also experienced a significant decrease of 36.76 per cent to $4.27 billion in May compared to $6.76 billion in the corresponding month last year. From July to May, imports fell by 29.22 per cent to $51.15 billion, down from $72.28 billion during the same period last year.

    The government has implemented restrictions on luxury and non-essential goods while promoting imports of raw materials, semi-finished products, pharmaceuticals, food, and energy products. This policy shift has resulted in a substantial decline in the import bill over the past 11 months.

    As a result of these developments, the trade deficit has narrowed by over 40 per cent, reaching $25.79 billion between July and May of the fiscal year 2022-23, compared to $43.40 billion during the corresponding months of the previous year. In May, the trade deficit saw a year-on-year decline of 49.49 per cent to $2.08 billion.

    According to Dawn, the textile and clothing sector, which constitutes over 60 per cent of total exports, has been severely affected, making it challenging for the government to achieve its export target for the current fiscal year. Exporters have pointed out that the federal government lacks a clear strategy and effective prioritization, leading to a decline in textile exports.

    Exporters have also highlighted several root causes contributing to the export decline. These include shortages in working capital and liquidity, delayed refunds of taxes and levies, technology upgradation fund, and duty drawbacks.

    The promised faster refund system has not functioned as intended, resulting in refund processing times of 3-5 months instead of the expected 72 hours. The sector is also grappling with increased financial and energy costs.

    In addition, exporters are facing challenges in procuring raw materials and other inputs, both domestically and through imports. The State Bank of Pakistan’s hurdles in opening letters of credit have further contributed to the decline in exports.

    The negative growth in exports, except for a slight increase in August due to backlog clearance, poses a significant concern as it threatens the balance of the country’s external account.

    The government needs to address these issues promptly and formulate effective policies to revive the export sector and stimulate economic growth.