ISLAMABAD: Pakistan’s merchandise trade gap ballooned by 31.38 per cent in the first four months of the current fiscal year over the last year owing to highest-ever increase in imports and fall in export proceeds.
As a result, the trade deficit reached $6.871 billion in July-October this year from $5.230 billion over the corresponding period last year, suggested data of Federal Bureau of Statistics on Friday.
Trade gap swells even much more in the month of October on the back of rising import bill and decline in export proceeds.
This indicates that country`s exports may fall in months ahead, while imports bill will rise because of high fuel and food imports.
For the current year, the government forecast a trade deficit at $17.292 billion as its rebounding economy raises demand for manufacturing and oil imports. The oil and eatable imports bill also expected to swell in the year 2011-12.
Since January 2011, the trade deficit was improving against the corresponding months last year owing to buoyancy in monthly export growth combined with slowdown in imports until June 30.
But since then, a surge in demand has been witnessed for import of raw materials for the manufacturing sector. Main stimulus behind this industrial demand was the government`s recent decision to lower interest rates, which improved availability of credit to private sector.
Contrary to this, the fall in export proceeds against surge in imports also led to deterioration in the balance of trade.
As a result, the current account deficit also widened to $1.209 billion in July-September period this year as against $597 million over the same period last year.
Even the current account deficit deteriorated despite the rise in the flow of remittances, which were still on the higher sides but failed to contain the ballooning current account deficit because of decline in exports proceeds during the period under review.
Pakistan`s merchandise exports reached $7.853 billion in July-October period this year as against $6.996 billion over the last year, showing an increase of 12.25 per cent. But a fall of 2.17 per cent was witnessed in exports proceeds in the month of October this year as it stood at $1.896 billion as against $1.938 billion over the last year.
Last year, the global price hike of commodities, especially of cotton based textile group pushed up the over-all exports volume from the country by the end of June 2011. The decline in exports indicates that the cotton prices were no more reflected in export proceeds this year.
The government has projected an export target of $25.618 billion for the current fiscal year.
This target was projected on the back of a claim that Pakistan`s textile and clothing exports could reach over $15 billion for the year 2011-12.
On the other hand, import bill went up by 20.43 per cent to $14.724 billion in the first four months this year as against $12.226 billion last year.
Even imports surged by 12.86 per cent in October as it reached $3.607 billion as against $3.196 billion last year.
The government has projected an import target at $42.910 billion in 2011-12. This alone includes the import bill of petroleum products, which could reach $12 billion and over $4 billion import of eatables in the year under review.