ISLAMABAD – Pakistan’s trade deficit swelled to $33.89 billion during eleven months (July 2017 to May 2018) of the ongoing fiscal year (FY2017-18), putting pressure on the country’s foreign exchange reserves, which are already under pressure.
The country’s trade deficit went up by 13.4 percent in one year. The trade deficit was recorded at $29.9 billion during the corresponding period of the previous fiscal year (FY2016-17), according to Pakistan Bureau of Statistics (PBS).
Pakistan’s exports increased to $21.3 billion during July-May period of FY2017-18 as against $18.5 billion of the corresponding period of the previous year, showing growth of 15.28 percent. Similarly, Pakistan’s imports also increased by 14.12 percent during the period under review. The country imported goods worth $55.2 billion during July-May period of FY2017-18 as compared to $48.3 billion of the same period of last year. The exports increased due to the government’s incentives package and rupee depreciation against the US dollar. The government had recently extended the export package worth Rs195 billion for next three years i.e. up to 30th June 2021 to further increase the country’s exports. The package aims at improving the competitiveness of the textile and non-textile export sectors to continue the export growth in the coming financial years.
In order to improve competitiveness and incentivize investment in export-oriented production, the Drawback of Local Taxes and Levies (DLTL) has been extended, on the same terms and conditions, for the commercial and manufacturer exporters. The zero rating of textile machinery imports and withdrawal of duty on manmade fibre other than polyester has been continued. Besides, in order to encourage more non-traditional sectors, electric fans, electrical appliances, electricity equipment and cables, transport equipment including motor bikes, sports bags, leather products e.g. leather wallets, auto-parts, stationery, furniture, fresh fruits & vegetables, meat & meat preparations including poultry, juices & syrups have also been included in the package. The federal government has extended the duration of Rs 3 per unit subsidy under Industrial Support Package (ISP) for another three months.
According to the latest data of Pakistan Bureau of Statistics, Pakistan’s exports enhanced by 32.35 percent to $2.14 billion in May 2018 from $1.62 billion of May 2016. Meanwhile, the imports recorded a growth of 14.77 percent and reached $5.81 billion in May 2018 from $5.1 billion in the same period of the last year. Therefore, the trade deficit was recorded at $3.67 billion in May 2018 as against $3.45 billion of May 2017, showing an increase of 6.5 percent.