Some good news for Pakistan, as the cash-starved country is witnessing a massive decline in trade deficit during the current fiscal year – 32.65 percent in the first six months and 40.70 percent for December when compared with the corresponding periods last year.
Latest data released by the Pakistan Bureau of Statistics (PBS) shows that the trade deficit was down to $17.13 billion during the July-December period of FY23 [2022-23] against $25.44 billion in FY22 [2021-22].
Imports in the July-December period shrank by 22.63 percent to $31.38 billion from $40.56 billion in the same period last year. Likewise, exports were also down by 5.79 percent to $14.25 billion against $15.125 billion.
In December 2022, exports were down 16.64 percent to $2.3 billion from $2.76 billion in the same month a year ago, while imports dropped 31.9 percent to $5.16 billion from $7.58 billion in December 2021.
Comparing monthly trade performance with the previous month (November), goods exports in December 2022 fell 3.64 percent from $2.39 billion in the previous month. Similarly, imports are also down 0.4 percent from November’s imports of $5.18 billion.
The six-month average exports were $2.37 billion against the last fiscal’s monthly average of $2.65 billion, indicating that at the end of FY23, the economy may considerably lag behind even reaching last year’s total exports of $31.79 billion.
However, the average monthly imports during July-December of FY23 were at $5.23 billion, whereas FY22’s average was $6.68 billion.
It is to be noted that in the last fiscal, the economy accumulated a historic high trade deficit of $48.38 billion, recording above 31 percent increase over the previous year.
The government, in May last year, had banned the import of all non-essential luxury goods in a bid to stabilise the economy as the current account deficit has spiralled out of control and foreign exchange reserves have tumbled while the rupee has plummeted to historic lows against the US dollar.
But in August, the country lifted the import ban on luxury goods in August, however, such items were heavily taxed to curtain the outflow of dollars.
The country’s foreign reserves have fallen to as low as $5.82 billion, barely enough to cover a month of imports.