Trade deficit swells to $14.96bn in 7MFY21


Pakistan’s trade deficit swelled 8.27 per cent to $14.96 billion in the first seven months of 2020-21 from $13.82bn over the corresponding period last year, Pakistan Bureau of Statistics (PBS) data showed on Monday.

The trade deficit posted a positive trend mainly driven by an increase in imports especially of raw materials and semi-finished products for use in domestic industries. The trade gap has been widening since December 2020.

In January, it swelled by 21.03pc to $2.60bn as against $2.14bn over the corresponding month of last year. However, it declined by 1.44pc on a month-on-month basis.

In FY20, the country’s trade deficit had narrowed to $23.099bn from $31.820bn.

Federal Minister for Planning Asad Umar told Dawn that a rise in trade deficit was expected because of growth in the large-scale manufacturing sector. He said industries were importing raw materials and other stuff which led to higher LSM production.

Mr Umar said that at the moment the growth in remittances was sufficient to finance the import bill. He went on to say the continuous growth in exports and remittances will provide enough space to finance import bills in the coming months. However, there will be a problem in case of drop in export proceeds or remittances.

Unofficially, it is believed that the current account deficit in FY21 will remain in the range of $4bn to $6bn by end of June.

According to the PBS data, the import value in 7MFY21 rose 6.9pc to $29.205bn as against $27.316bn in the corresponding period last year.

In January, the import value was recorded at $4.733bn as against $4.121bn in the same month last year, a growth of 14.85pc. The import bill declined by 5.43pc on a month-on-month basis.

In FY20, the import bill witnessed a steep decline of $10.29bn, or 18.78pc, to $44.509bn, compared to $54.799bn in the preceding year.

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 positive sign is that the increase in duty-free imports is mostly related to raw materials and other stuff consumed by the LSM sector.

Exports grew year-on-year 8.11pc to $2.132bn in January from $1.972bn.

In 7MFY21, export proceeds rose 5.53pc to $14.242bn as against $13.496bn in corresponding period last year.

During July-January 2020-21 from a year ago, the exports of value-added and non-traditional products increased especially for tents & canvas (49pc), jerseys & cardigans (37pc), pharmaceuticals (28pc), cutlery (27pc), socks & stockings (26pc), women’s garments (22pc), home textiles (17pc) and textile made-ups (9pc), according to commerce ministry.

The falling export trend was observed in mostly non-value added products, such as cotton (96pc), maize (49pc), raw leather (30pc), cotton yarn (24pc) and cotton fabric (9pc).

On the basis of export growth Pakistan’s top markets for 7-month’s period are Indonesia (43pc), Australia (22pc), US (21pc), UK (21pc), Poland (14pc), Germany (12pc), the Netherlands (11pc) and China (9pc).

The markets showing declining exports during July-January 2020-21 were Thailand (43pc), Malaysia (24pc), Sri Lanka (23pc), the UAE (21pc), Bangladesh (18pc), Italy (7pc) and Spain (5pc).


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