According to Pakistan Bureau of Statistics (PBS), trade deficit of Pakistan is declined by 18 percent in July, 2022. Reduction in import bill may have resulted in this decline as import bill of the country fell by 13 per cent to $4.86 billion in July 2022 as compared with $5.57 billion in the same month of the last year.
On the other hand, the country also experienced decline in exports 5.17 per cent to $2.22 billion in the month of July this year as compared with $2.34 billion in the same month of the last year. This decline can be attributed to nationwide shutdown of factories including textile mills as the sector was hobbled by a countrywide energy crisis.
Read more: 400 textile mills facing shutdown
The trade deficit sharply declined by 46.76 per cent to $2.64 billion in July 2022 when compared with $4.96 billion in June 2022.
Although tight restrictions on imports created hurdles for the masses especially the business community including automobile sector, the import bill declined by 38 per cent to $4.86 billion in July 2022 as compared with $7.88 billion in June 2022.
Meanwhile, the exports also declined by 24 per cent to $2.22 billion in July 2022 in comparison to $2.92 billion in June 2022.
Experts at KASB KTrade Securities highlighted strict import control measures as the reason behind the decline in trade deficit.
The experts added that this is the lowest trade deficit level in the last 15 months.
In addition, this would improve the situation of current account and investors might regain confidence about the competence of government in dealing macroeconomic challenges.
As rapidly increased oil prices drove the economy towards deterioration, in case Pakistan was able to attain cheaper energy from Russia or Iran then it could have been enough to bridge the trade deficit.
It has also been pointed out by the experts that if the oil price supply shock due to Ukraine war ends, Pakistan’s economy could return to a more stable condition.