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July-November: Trade deficit widens to $11.8b, but exports in Nov pick up

ISLAMABAD: Pakistan posted a trade deficit of $11.8 billion in the first five months of the ongoing fiscal year, $2 billion more than in the previous year. However, exports have now gradually started recovering, giving hope of improvement on the external trade front.

The gap between exports and imports during the July-November period of fiscal year 2016-17 stood at $11.8 billion, said the Pakistan Bureau of Statistics (PBS) on Tuesday. After an improvement in monthly exports figures, the cumulative fall in exports during the first five months has come down to almost 4%, better than the results of previous months.

Exports plunged 3.93% to $8.2 billion during July-November period of this year, which was $335 million less than the comparative period of last year. Compared to this, the import bill increased 8.8% to almost $20 billion in the same period. In absolute terms, the import bill was $1.6 billion more than in the previous year.

Compared to the $11.8 billion trade deficit this year, the gap during the comparative period of last year was $9.8 billion. The five-month trade deficit was $2 billion or 19.9% more than the previous year.

For fiscal year 2016-17, the government has projected exports to grow to $24.75 billion and imports bill may remain at $45.2 billion by end of this fiscal year. It had projected $20.5 billion trade deficit for the whole fiscal year. However, the results so far show that the deficit may touch $24 billon by the end of the fiscal year, as the trade deficit in July-November period was 58% of the annual target.

The government closed the last fiscal year 2015-16 at an eight-year low level of exports, which dropped to $20.8 billion despite preferential access to European markets. The exports have been declining since the current government took over, falling from $24.5 billion in 2012-13.

Annual results

Exports in November increased to $1.76 billion, showing a growth of 6.2% when compared with the results of the same month last year, according to the PBS. In absolute terms, the exports were higher by $103 million.

However, imports kept growing at double digit pace and stood at $4.3 billion in November, which were $415 million more than last November’s imports. The trade deficit last month widened to $2.5 billion, which was 14.3% more than the comparative period of last year.

A latest World Bank report, which the lending agency released on Tuesday, showed that South Asia region has done little to expand its export base. Exports remain highly concentrated in textiles and apparel in Bangladesh, Afghanistan, Nepal, Pakistan and Sri Lanka, it added. Pakistan’s intermediaries’ exports were 54% of its global value chain exports, which showed they did little to graduate to the value-addition sectors.

The report noted that the global environment was becoming tougher. The demand for developing countries’ exports is limited by the slow recovery in industrial economies and the impact of decline in commodity prices on resource-rich economies. It said that benefits to many commodity importers have been eroded by declining remittances. New mega-regional trade agreements like the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP) may lead to trade and investment diversion away from non-members, said the World Bank.

Against this background, it has become even more urgent for countries in South Asia to make overdue investments in boosting competitiveness to avoid falling further behind comparator countries in the global marketplace, suggested the global lender.

It said that South Asia’s share in total global exports is just 2%. India, with an 80% increase in its market share in the past 15 years, has just reached 1.5% of the global exports market. Bangladesh, with somewhat slower growth of 50%, has passed Pakistan to become the second largest merchandise exporter in South Asia with nearly 0.2% of the global merchandise market.

In September this year, Prime Minister Nawaz Sharif had constituted a committee to address the issues faced by the country’s exporters within one week. However, more than three months have lapsed and the government has yet to come up with a package that may address the sector’s issues.

Courtesy : Express Tribune

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