LAHORE: Pakistan’s non-oil imports declined by 20% year-on-year (YoY) in January to $3.5 billion, the most in nine years, as current account deficit plunged 48% to $809 million in January, according to data released by State Bank of Pakistan (SBP).
On a month-on-month basis, non-oil imports fell by 3% from $3.3 billion in December last year to $3.5 billion last month.
In seven months (July-January) of current FY19, non-oil imports were recorded at $23.8 billion, registering a decline of 10% YoY of $26.4 billion during the period under review in FY18.
The 20% YoY decline was in January was fueled by a 34% YoY ($397 million, 46% of total fall) decline in imports of machinery alongside 44% ($244 million; 28% total fall) YoY decline in transport group imports.
During the first seven months (July-January) of the current financial year 2018-19, non-oil imports contracted by 10% YoY.
And 56% plunge in non-oil imports was contributed by a 21% YoY decline ($1.426 billion) of machinery imports followed by 29% contribution of transport group, which also nosedived 29% YoY ($741 million) in the first seven months of current FY19.
Also, the exports of non-factor services fell to $3.078 billion during July-January FY19 from $3.105 billion in the corresponding period of FY19.
Export growth during the period under review was recorded at 1.6% and imports recorded a growth of 0.8% compared to import growth of 19.7% posted during July-January of FY18.
According to Arif Habib Limited’s (AHL) Head of Research Samiullah Tariq, the decline in non-oil imports was due to currency depreciation, fiscal consolidation and imposition of regulatory duties.
“It bodes well for the economy because lower import bill will reduce the quantum of current account deficit and the borrowing required to finance it
And it would also provide the country time to increase its exports,” said Mr Tariq.
Much to the government’s relief, the trade deficit during the first seven months (July-January) of the current financial year 2018-19 contracted 9.66% to $19.3 billion compared to $21.324 billion recorded during the same period of FY18.
According to data released by the Pakistan Bureau of Statistics, the trade deficit plummeted 31.7% year-on-year (YoY) in January clocking at $2.5 billion compared to $3.6 billion in the same month last year.
On a month-on-month basis (MoM), trade deficit posted an increase of 4.1% to $2.5 billion compared to $2.4 billion in December last year driven by a rise in imports MoM to $2.5 billion in January.
Imports touched $4.5 billion in January, registering a decline of 19.1% YoY compared to $5.6 billion in January 2018, which was a major contributing factor in the fall of the trade deficit in January to $2.5 billion.
Interestingly, imports posted a growth of 1.3% on an MoM basis in January to $4.5 billion compared to $4.4 billion in December 2018.
In the first seven months of FY19, imports contracted 5.5% to $32.5 billion compared to $34.3 billion in the same period of FY19.
Correspondingly, exports posted a 2.2% increase or Rs13.2 billion during July-Jan FY19 compared to $12.9 billion in the same period of FY18.
And on an MoM basis, exports contracted 1.8% to $2.0 billion in January against $2.1 billion in December last year.