As a result of rising imports, mainly petroleum, Pakistan’s trade deficit grew by 55.29 percentage points during the fiscal year that concluded on June 30, 2022.
According to the Pakistan Bureau of Statistics (PBS), the country’s trade imbalance grew to $48.15 billion during the most recent fiscal year, a significant increase from the prior year’s figure of $31.07 billion. During the period of time under consideration for this study, the country’s imports grew at a rate that was noticeably faster than its exports, which led to a large growth in the trade imbalance.
In the fiscal year under review, exports climbed by 25.51 percent to $31.76 billion, compared to $25.30 billion in fiscal 2020-21. On the other hand, imports increased by nearly 42 percent to $80.01 billion in the fiscal year under review, compared to $56.38 billion the previous year.
The trade deficit reached $4.8 billion in June, a 33 percent rise from June 2021, when it was $3.62 billion, and a 16.50 percent increase from May 2022, when it was $4.151 billion. Comparatively, the trade deficit was $3.62 billion in June 2021.
The overall value of exports reached $2.88 billion in June of the current fiscal year, representing a 5.83 percent increase from $2.72 billion in June of the preceding fiscal year and a 10 percent increase from $2.62 billion in May of 2022.
The value of imports reached $7.7 billion in June 2022, representing a 21.57 percent increase from the value of $6.3 billion in the same month of 2021, and a 14 percent increase when compared to the value of $6.77 billion in May 2022.
According to Tahir Abbas, head of research at Arif Habib Limited, “the enormous trade deficit that occurred during the previous fiscal year was mostly caused by the high import bill of petroleum and foods groups.” According to him, the costs of fuel and several food goods shot up significantly on the international market, which drove the nation’s import bill up by a factor of ten or more.
According to Tahir, the enormous trade imbalance has also had a detrimental influence on the current account deficit, and he projected that it would be leveling off at approximately $16.5 billion for the final fiscal year. On the other hand, he brought up the fact that during the previous fiscal year, textile exports increased by 26 percent, reaching a total of $19.4 billion.
Tahir made a forecast regarding the future trend of imports during the current fiscal year and their impact on the trade deficit. He predicted that the trade deficit would decrease as a result of the intervention of the government to reduce imports as well as the steps taken by the State Bank of Pakistan to control imports.
He predicted that imports of the COVID-19 vaccine would be low and that high prices for petroleum products on the local market would lead to a reduction in consumption. This would, in turn, lead to a reduction in imports.