Pakistan’s trade deficit mounted to $7.16 billion in first two months of the ongoing fiscal year as imports surged to $11.74 billion record level in July and August 2021 period of FY 2021-22.
Karachi: State Bank of Pakistan reported Friday that the country has sustained a huge deficit of $2.36 billion in just two months of the ongoing financial year.
During July-Aug FY21, the current account was surplus by $801 million, but this year the CAD has turned into deficit because of massive expansion in national imports.
According to State Bank’s latest data, released today, Pakistan suffered $2.3 billion dollars current account deficit during July/Aug FY22 and the CAD without official transfers mounted to $2.36 billion dollars during this period.
The first two months trend of current account deficit indicates the country can face more than $24 billion current account deficit in 2021-22, if the current CAD trend prevailed throughout the fiscal year.
Pakistan’s trade deficit mounted to $7.16 billion in first two months of the ongoing fiscal year as imports surged to $11.74 billion record level in July and August 2021 period of FY2021-22.
According to provisional data of Pakistan Bureau of Statistics, during July-August 2021, exports stood at 4.58 billion dollars while imports widened to 11.74 billion, leading to $7.16 billion trade deficit.
In other words, the trade deficit has usurped the inflows of remittances for July-August 2021 and IMF loan of $2.8 billion, released on 23rd of August. This factor is also driving up value of dollar which mounted to 168.50 rupees in open market today.
In August 2021, the second month of the current financial year witnessed 133 percent staggering growth in trade deficit driven largely by an almost triple increase in the country’s imports compared to exports. Imports in August crossed $6 billion ($6.3 billion) against $3.32 billion in same month last year.
A spike was noted in trade deficit for the second consecutive month as merchandise trade deficit mounted to $4.05 billion in August against $1.740 billion over the corresponding month last year.
The trade deficit might cause pressure on the external side, but government officials believe that increase in remittances, growth in export proceeds and Roshan Digital Account will help mitigate the pressure to a large extent.
The initial estimates show that the rising import bill might push the current account to more than $20 billion in the FY22. Trade deficit had reached an all-time high of $37.7 billion in FY18. However, the government measures led to a drop to $31.8 billion in FY19 and $23.183 billion in FY20. The trend reversed and trade deficit was recorded at $30.796 billion in FY21.
The trade gap has been widening since December last year, mainly led by exponential growth in imports and comparatively slow growth in exports.
The import bill in August rose by 89.9 percent to $6.31 billion against $3.32 billion over the corresponding month of last year. On the month-on-month basis, the import bill increased by 12.7 percent.
In the last fiscal year (FY21), the import bill surged by 25.8 percent to $56.091 billion from $44.574 billion the previous year.