ISLAMABAD: Pakistan’s trade imbalance widened to an all-time high of $48.66 billion in the current fiscal year, up from $30.96 billion the previous year, representing a 57% rise on the back of higher-than-expected imports, according to preliminary government figures released on Saturday.
Despite a restriction on over 800 products in May, the trade gap reached such frightening levels.
The coalition government’s campaign against a bulging trade imbalance has failed to yield the intended impact as it grew by 32.3pc to $4.84bn in June from $3.66bn a year ago. It was mostly driven by an almost twofold rise in imports compared to exports.
The trade imbalance for the current fiscal year has surpassed $37 billion.
In the following years, the trade deficit shrank to $31.8 billion in 2018-19, $23.2 billion in 2019-20, $30.8 billion in 2020-21, and $48.664 billion in 2021-22.
The $48.66 billion disparity between imports and exports in FY22 is much larger than the $30.1 billion shortfall in FY21.
The trade imbalance for the current fiscal year is being driven by the highest-ever increase in oil prices and commodities on the international market.
The trade imbalance has increased due to an extraordinary increase in imports due to a rise in global commodity prices, while exports have remained stable at roughly $2.5 billion to $2.8 billion per month, largely of semi-finished items and raw materials.
The trade deficit was $4.04 billion in May and $3.78 billion in April, indicating that there was no respite in monthly deficits after former Prime Minister Imran Khan was deposed in April by a vote of no confidence in parliament.
The import bill is increasing.
The import cost climbed by 43.45 percent to $80.51 billion in 2021-22, up from $56.12 billion the previous year.
The import cost increased by 23.26 percent in June to $7.74 billion from $6.28 billion the previous month. In June, imports climbed by 14.32 percent month on month. The import bill was $6.77 billion in May, up from $6.67 billion in April.
On May 19, the government put a restriction on the import of roughly 800 luxury and non-essential products.
Imports have increased in all main groups, according to the Pakistan Economic Survey 2021-22. Several reasons have led to the sharp increase in imports over the time period under consideration. Rising global commodity prices played a key role in the increased import volume.
According to disaggregated import statistics, the energy group is the major source of the rise in imports, accounting for one-third of the year-on-year increase in imports over the period.
Price-led pressures were also observed in Pakistan’s imports of non-energy commodities such as edible oil (palm and soya bean), sugar, tea, fertiliser, and steel. At the same time, domestic demand for imported raw commodities such as cotton, steel, and capital goods increased as a result of the crisis.
Exports are increasing.
For the first time, not only was the export objective met, but it also surpassed the psychological barrier of $30 billion. For the previous decade, Pakistan’s exports have stayed below this level.
Pakistan’s exports grew 26.6 percent to $31.845 billion in the fiscal year recently completed, up from $25.160 billion the previous year. Exports increased 6.48 percent to $2.89 billion in June, up from $2.72 billion the previous year.
Exports increased 18% to $25.3 billion in 2020-21, up from $21.4 billion the previous year.
The government anticipated an annual export target of $31.2 billion for commodities and $7.5 billion for services in the current fiscal year.
According to an official study, the textile industry, particularly the high-value-added segment, accounted for around two-thirds of the growth.
Pakistan’s textile exporters took advantage of available policy support, such as the SBP’s concessionary refinance schemes for working capital and fixed investment, and regionally competitive energy tariffs, to ship higher volumes to key destinations such as the United States, the United Kingdom, and the European Union.
Higher cotton prices also contributed to higher export unit pricing for both low- and high-value-added textile goods. Apart from textiles, rice exports increased during the fiscal year 2021-22, owing mostly to the non-basmati type.