Pakistan’s trade deficit touches record high of $34b in July-May FY18

ISLAMABAD: Pakistan’s trade deficit clocked a record high of $34 billion during the eleven months of the outgoing financial year 2017-18.

This poses a major challenge for the next government to rein in the widening current account deficit as trade deficit increased 13.3 percent for the first eleven months (July-May) of FY18, according to official data, reported Dawn.

In May, the trade deficit increased to $3.76 billion posting an 8.6 percent year-on-year (YoY) increase.

The last FY17 had witnessed trade deficit to a then-record high of $32.58 billion, surging 37 percent from the previous FY16.

Imports clocked in at $55.3 billion, posting a 14 percent rise during July-May FY17 compared to $48.54 billion in the corresponding period of last year.

The import bill posted a 15 percent on a month-on-month basis, touching $5.9 billion in May against $5.09 billion in April 2018.

The commerce ministry said the imports in May had exhibited an increase mainly because of high oil prices and rise in volumes of imports of fuels and machinery to overcome energy deficit.

The total increase in imports during July-May FY18 was around 14 percent compared to corresponding last FY17.

The increase in import bill was attributed to an increase in arrival of petroleum products, food products and capital goods.

And exports continued their recovery which started early last year. Exports exhibited figures of above $2 billion for the third month running since March 2018 and during May it posted an increase of 32 percent year-on-year compared to same month last year.

The highest ever month-on-month (MoM) increase was posted in dollar terms as export proceeds rose to $2.14 billion in May 2018 against $1.62 billion in May 2017.

Yearly export growth reached 15 percent for July-April FY18 compared against 14 percent in the corresponding period of last year.

Overall exports in July-May FY18 touched $21.32 billion, which is roughly $1 billion more than annual figures for FY17.

During May, the merchandise exports earned Rs247.5 billion for the national exchequer against Rs169.7 billion earned in the corresponding period of last year.

This reflects additional revenues of roughly Rs80 billion for exporters in May 2018 which translates to a major gain of 46 percent.