Despite giving huge concessions to exporters at a critical time, Pakistan’s exports totalled only $5.4 billion in first quarter of the current fiscal year, but the trade deficit contracted to $8.9 billion following a flat growth in imports.
A 4.6% rise in exports was far lower than expectations, but the deficit was driven down by the stagnation in imports that stood at $14.3 billion in the July-September quarter of 2018-19, showed statistics released by the Pakistan Bureau of Statistics (PBS) on Wednesday.
The trade deficit of $8.9 billion was 1.6% or $145-million lower than the deficit recorded in the corresponding quarter of previous fiscal year. Exports in July-September increased 4.6% to $5.4 billion. In absolute terms, the export receipts rose $234 million.
The value of imported goods stood at $14.3 billion, which was only 0.63% or $90-million higher than the import bill in the corresponding period of previous fiscal year.
Exports were still 264% less than the value of imports.
In the past 10 months, the State Bank of Pakistan has let the rupee depreciate against the US dollar by 26.6% to Rs133.7 aimed at curtailing the current account deficit that remains Pakistan’s biggest concern.
However, despite the steep fall in the value of the currency, Pakistan’s exporters have not been able to take full advantage of the situation due to their failure to diversify exports. They have been getting incentives from every government including the current Pakistan Tehreek-e-Insaf (PTI) administration but have not been able to achieve any major breakthrough.
The PTI government has also protected the benefits that the last government provided for the exporters. The five major export-oriented sectors will also be exempted from the increase in prices of gas and electricity.
On the back of these concessions, the government expects exports to grow 18% to $29.4 billion in the current fiscal year.
The rupee is also expected to shed further value in the coming months if Pakistan and the International Monetary Fund agree on a new bailout package, according to finance ministry sources.
Monthly trade statistics
Trade statistics for September 2018 also showed that the exporters could not diversify their goods shipments.
Pakistan’s exports grew only 3.6% to $1.73 billion in September over the same month of previous year. Export receipts have been hovering around $2 billion for the past few years.
In absolute terms, the export receipts increased only $60 million to $1.73 billion. Imports contracted marginally to $4.43 billion in September. The import bill was only $8 million less than that in September 2017.
Consequently, the trade deficit contracted 2.43% to nearly $2.7 billion in September over the same month of previous year. In absolute terms, the deficit dropped $67 million.
On a month-on-month basis, exports in September actually contracted 14.4% to $1.73 billion over August 2018. There was a dip of $289 million in export receipts.
Imports also contracted by 11.3% to $4.43 billion. There was a reduction of $562 million in the import bill in the month.
Resultantly, the month-on-month trade deficit also shrank 9.2% or $272 million in September over August.