Pakistan trade deficit rocketed by 39 percent in first nine months of fiscal year
KARACHI: The Pakistan trade deficit rocketed by 39 percent in first nine months (July -March) of fiscal year 2016-17 (FY17) as rising oil demand helped to push up the import bill.
The Pakistan Bureau of Statistics (PBS) reported the trade gap increased by 38.8 percent to $23.4 billion, surpassing the $20.5-billion target that the Finance Ministry had fixed for FY17, ending on June 30 on Tuesday.
The increase in imports was mainly driven by the rise in machinery and petroleum imports: POL, contributed significantly to the overall increase in imports. Basically, the rising share of capital goods – like machinery, electrical machinery, energy related products, aluminum alloys, etc – in overall imports reflects a pro-growth change in the country’s import composition.
Higher investment in power, infrastructure and construction will not only boost economic activities, but also help address energy shortage in the country, said State Bank of Pakistan (SBP) in its second quarterly FY17 report. Increase in petroleum imports was driven primarily by higher volumetric imports of furnace oil and high-speed diesel (HSD), as a result of higher demand from power and transportation sectors respectively, SBP added.
Further added, “Rising imports of power generators also contributed to the increase in demand for HSD. It might also be recalled that the impact of the policy shift towards high quality petrol (92 RON) has led to higher imports of petrol, as local refineries struggle to upgrade their existing set-ups to comply with new product standards in the interim period; this has also contributed to lesser crude oil imports, and lower domestic production of POL products during the period”.
The central Bank said though decline in exports was mainly due to a 9.3 percent decline observed in the first quarter of the year. Exports grew by a marginal 1.4 percent in second quarter FY17, as a recovery in international prices of some textile products and an increase in demand for Pakistani textiles in the EU, boosted textile exports.
Within textile exports, items that exhibited improvements included readymade garments and bedwear. Moreover, exports of some non-traditional items, like fish, fruits, spices, tobacco, plastic, and naptha etc. also increased.
The exports fell by 3.1 percent from $ 15.5 billion in nine months of FY16 to $ 15.1 billion in the same period of current fiscal. Similarly, significant increase in imports by 18.7 percent to $38.6 billion during said period of ongoing fiscal dampened the Pakistan trade balance. The imports of the country stood at $ 32.5 billion by the end of nine months of FY16.
During the month of March 2017, country saw meager improvement in exports and considerable increase in imports as Pakistan exported $ 1.8 billion worth goods to the world that was 3.7 percent higher than exports worth of $1.7 billion in the same month of last fiscal.
On the other hand, imports of the country registered 41.3 percent steep growth to $ 5.1 billion in the month of March 2017 as compared to $ 3. 6 billion imports in corresponding month of FY16.
As a result, country’s trade imbalance broadened enormously by 77.4 percent in the month of March 2017 to $ 3.3 billion as against $ 1.8 billion of March 2016.
Source: Web Desk