| Welcome to Global Village Space

Thursday, February 15, 2024

Trade deficit rises to $2.968bn in March

According to date released by the Ministry of Commerce on Thursday, Pakistan’s trade deficit rose to 97.6 per cent in March, growing to $2.968 billion from $1.502bn over the corresponding month of last year.

Since December 2020, Pakistan’s trade deficit has been widening and, on a month-on-month basis, the deficit grew by 17.77pc. In February, it went up by 23.93pc to $2.52bn as against $2.03bn over the corresponding month of last year.

Justifying the rise in the import bill, Commerce Adviser Abdul Razak Dawood tweeted that the imports grew to $5,313 million in March which is mainly due to increased imports of petroleum, wheat, soybean, machinery, raw material & chemicals, mobiles, fertilisers, tyres and antibiotics and vaccines.

In the past nine months, the deficit rose to $21.241bn from $17.352bn over the corresponding months of last year, showing an increase of 22.4pc. The surge in trade deficit is primarily caused by higher growth in imports with lower growth in exports in March 2021.

Read More: Pakistan says no trade with India until it reverses Aug 5th action

The import bill has been consistently increasing since the past few months. It went up by 60.22pc to $5.313bn in March from $3.316bn over the corresponding month of last year.

Between July and March FY21, the import bill rose by 14.68pc to $39.91bn this year as against $34.799bn over the corresponding months of last year.

According to commerce advisor, the increase in import of raw material as well as import of wheat, sugar and cotton is what has led to the rise in the import bill.

The continuously declining imports in the last two years had given the government some room to manage the external accounts. But the government would now face a tough time as the rising import bill is bound to create pressures on the external side.

However, it is believed that the growth in the remittances at the moment would be sufficient to finance the import bill.

Exports posts a growth year-on-year 29.27pc to $2.345bn in March from $1.814bn. On a month-on-month basis it increased by 13.4pc.

According to Dawood, the growth in exports in March is the monthly highest recorded in last 10 years. It is also the first time since 2011, that the exports have surpassed the $2bn mark for six consecutive months.

He further stated that the export growth of 29.3pc over March 2020 should not be considered as there was a lockdown last year.

The textile sector has warned the government of a shortage of raw material in the coming months and has urged the government to reconsider its decision of not allowing cotton imports from India.

The stakeholders have said that the export orders would eventually go to rival countries if cotton yarn is not made available in Pakistan at cheaper rates.