Pakistan’s trade deficit widened by 32.04 per cent to $2.683 billion in December from $2.032bn over the same month last year mainly on account of higher imports, latest data released by the Pakistan Bureau of Statistics (PBS) showed on Thursday.
The country’s imports have been on a rising trend since September. The continuous decline in imports in the last two years had provided some breathing space to the government in managing external accounts despite a downward trend in exports. However, rebounding imports are likely to create pressures on the external side.
The pace of growth in imports is projected to increase further in the coming months following the abolishment of regulatory duty on imports of raw materials and semi-finished products.
The trade deficit between July-December increased to $12.423bn, up by 6.44pc from $11.671bn over the same period last year.
Earlier, the country’s trade deficit during FY20 had narrowed to $23.099bn from $31.820bn.
In December, the import bill rose by 25.25pc year-on-year to $5.035bn as against $4.020bn over the corresponding month last year. This is the highest growth in imports since June, 2018. Meanwhile, on a month-on-month basis, imports in December rose by 16.69pc compared to November.
During 6MFY21, the overall import bill increased by 5.72pc to $24.521bn, up from $23.195bn over the corresponding period last year.
In FY20, the import bill witnessed a steep decline of $10.29bn or 18.78pc to $44.509bn, compared to $54.799bn in the previous year.
No word came from either the Ministry of Commerce or Finance on the rising trend in import bills.
However, Prime Minister Imran Khan took to Twitter for the second time to share regional export trends. “I have received the regional export trends from the Ministry of Commerce and this shows that, compared to our exports, the exports of India and Bangladesh for November and December 2020 showed negative growth.”
Compared to Pakistan’s exports growth of 18.3pc in December, Indian exports posted a negative growth of 0.8pc and Bangladesh 6.11pc. “I wish once again to congratulate the exporters and the Ministry of Commerce for this achievement”, the premier further remarked.
In absolute terms, Pakistan’s export proceeds edged up to $2.352bn in December 2020 from $1.988bn last year. In the 6MFY21, export proceeds rose to $12.098bn as against $11.524bn over the last year.
Export proceeds were up by 8.19pc when compared with the previous month. Exports in the new fiscal year started on a positive note but witnessed a steep decline of 19pc in August before rebounding in September, October, and November.
In December 2020, an increasing trend has been witnessed in export of value-added and non-traditional products including tobacco & cigarettes up 212.2pc, ethyl alcohol 128.6pc, stockings & socks 49.8pc, home textiles 38.1pc, women’s garments 37.8pc, jerseys & cardigans 37.3pc, gloves 25.5pc, t-shirts 16.9pc, rice 15.5pc and fruits & vegetables 13.4pc as compared to December 2019.
A decreasing trend was noted in the export of mostly non-value-added products like cotton 93.3pc, dry fruit & nuts 78.5pc, maize 61.2pc, plastics 41.4pc, cement 8.5pc and raw leather 8.5pc.
Geographically, in December 2020, exports increased to Indonesia by 151.6pc, China 92.5pc, Russia 63.2pc, United Kingdom 46.9pc, Germany 37.6pc, Netherlands 37.5pc, Belgium 32.8pc, Australia 30.5pc, Poland 27.9pc and the United States 27.2pc.
The exports posted a negative growth to Kenya 40.5pc, South Korea 38.8pc, Thailand 24.0pc, Japan 22.3pc, Bangladesh 20.3pc, Sri Lanka 19.9pc, United Arab Emirates 10.5pc and Afghanistan 5.1pc.
The government has already doled out cash subsidies under drawback on local taxes and levies as well as allowed lower rates of electricity and gas for the export-oriented sector.
Data shows visible improvements in export orders from international buyers, mainly in the textile and clothing sectors since May.
Export growth potential
Meanwhile, Special Assistant to Prime Minister Dr Moeed Yousaf briefed the Apex Committee on Economic Outreach at Islamabad. The meeting was chaired by PM Imran Khan.
Dr Yousaf briefed the meeting that an extensive mapping exercise about export potential of goods and services has been carried out in consultation with relevant government ministries, provinces and the private sector. He informed that the information technology, textiles, agriculture, meat, leather, pottery & ceramics, machinery & auto parts, metals and surgical instruments possess an additional export potential of $31bn.
Dr Moeed further updated that a multiplier effect of additional $2bn can be achieved from medical and religious tourism, transport services, manpower, pharmaceuticals, marble & granite and salt products. He apprised that there is potential of additional exports worth US $16.7bn to UAE, USA, China, Germany, UK, France, Indonesia, Spain, Algeria and Malaysia.
He also presented an overview for human resource allocation, key performance indicators for foreign missions of Pakistan, human resource training and strengthening of ministerial structures.
PM Imran Khan said the main objective of this apex committee is to chalk-out a long term plan for import substitution and increasing exports so that Pakistan becomes self reliant.
The premier also emphasised the need for adoption of international best practices for priority sectors and consultations with international experts to achieve success. He also stressed upon the need to enhance inter-ministerial coordination and public-private partnership for increasing exports.
The meeting decided that the Ministry of Commerce will furnish an action plan with timelines in one week time and will update the PM on a weekly basis regarding progress made on priority sectors.