Trade deficit balloons to $2.968 billion in March
ISLAMABAD: Pakistan’s trade deficit has ballooned by 97.6 per cent in March, growing to $2.968 billion from $1.502bn over the corresponding month of last year, Ministry of Commerce data showed on Thursday.
On a month-on-month basis, the trade deficit grew by 17.77pc.
The trade gap has been widening since Dec 2020. In February, it swelled by 23.93pc to $2.52bn as against $2.03bn over the corresponding month of last year.
Commerce Adviser Abdul Razak Dawood took to Twitter to justify the rise in the import bill. He said the imports grew to $5,313 million in March which is mainly due to increased imports of petroleum, wheat, soybean, machinery, raw material & chemicals, mobiles, fertilisers, tyres and antibiotics and vaccines.
The trade deficit in the nine months swelled to $21.241bn from $17.352bn over the corresponding months of last year, reflecting an increase of 22.4pc. The surge in trade deficit is mainly led by higher growth in imports with lower growth in exports in March 2021.
Razak says rising imports of petroleum, vaccines, raw materials, mobile phones main contributors
The import bill is constantly on the rise for the past few months.
The import bill went up by 60.22pc to $5.313bn in March from $3.316bn over the corresponding month of last year. On month of month basis, the import bill increased by 14.92pc.
Between July and March FY21, the import bill increased by 14.68pc to $39.91bn this year as against $34.799bn over the corresponding months of last year. This growth has come from increase in import of raw material as well as import of wheat, sugar and cotton, the commerce adviser said.
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 rise in imports in the coming months will place the incumbent government in real trouble on the external side. However, the growth in remittances at the movement will be sufficient to finance the import bill.
Unofficially, it is believed that the current account deficit in FY21 will remain in the range of $4bn to $6bn by end of June.
Exports posts a growth year-on-year 29.27pc to $2.345bn in March from $1.814bn. On a month-on-month basis it increased by 13.4pc.
In 9MFY21, export proceeds rose 7pc to $18.669bn as against $17.447bn in corresponding period last year.
According to Mr Dawood, the growth in exports in March is the monthly highest in last 10 years. This is also the first time since 2011 that exports have crossed the $2bn mark for six consecutive months.
He went on to say that the export growth of 29.3pc over March 2020 should not be considered as it is misleading since there was a lockdown last year.
The value-added sector has warned the government about a possible shortage of raw materials in the coming months. The stakeholders have urged the federal government to allow duty-free import of cotton and cotton yarn.
The Economic Coordination Committee of the cabinet has allowed import of cotton and cotton yarn from India but the decision was reversed one day after by the federal cabinet chaired by Prime Minister Imran Khan.
The stakeholders had warned that export orders in hand will eventually be diverted to rival countries if the cotton yarn is not made available in the required quantity.
Published in Dawn, April 2nd, 2021