Trade deficit widens to $1.55 billion

* Exports up by 13%, imports by 44% in July and August

By Sajid Chaudhry

ISLAMABAD: The country’s exports registered a modest improvement by 13 percent while imports went up by 44 percent, widening the trade deficit up to $1.55 billion in just two months of the current fiscal year.

The government has suffered a trade deficit of $ 1.551 billion during the July-August period of current fiscal 2005-06 against the trade deficit of $ 561.347 million during the same period of last fiscal, showing an increase by 176.27 percent, according to trade figures made available to Daily Times on Monday.

The historic increase in the oil prices during the last fiscal continued in the July-August period of the current fiscal and led to a major increase in the trade deficit during these two months, an official said.

The other reasons for the increase in the trade deficit included the increased imports of machinery, industrial raw materials, cars and other dutiable imports in the July-August period.

The collection of the customs duty and other taxes on imports has increased by around 69 percent during the July-August period due to an increase in the dutiable imports, especially of vehicles.

The government has reduced the annual target and the rate of the petroleum development levy for the current fiscal year due to the increase in the oil prices. It will help increase the budget deficit, but the collection of federal taxes on the imports of oil and petroleum products will minimize the impact to a large extent, an official said.

The exports during the July-August period of the current fiscal year stood at $ 2.680 billion against the exports of $ 2.371 billion during the same period of last fiscal, showing an increase by 13.02 percent. The imports during July and August stood at $ 4.231 billion against the imports of $ 2.932 billion during the same period of last fiscal, showing an increase of 44.27 percent.

The trade deficit during the July-August period of the current fiscal year stood at $ 1.551 billion against the trade deficit of $ 561.437 million during the same period of last fiscal, showing an increase of 176.27 percent in the first two months of the current fiscal.

The exports in the month August of the current fiscal year stood at $ 1.408 billion against the exports of $ 1.187 billion during the same period of last fiscal, showing an increase of 18.56 percent.

The imports during August of the current fiscal year stood at $ 2.234 billion against the imports of $ 1.475 billion during the same period of last fiscal, showing an increase of 51.48 percent.

The trade deficit during August of the current fiscal year stood at $ 826.513 million against the trade deficit of $ 287.516 million during the same period of last fiscal, showing an increase of 187.47 percent.

The exports saw 10.71 percent growth in August as compared to the exports during July of the current fiscal year, while the exports during August stood at $1.408 billion against the exports of $1.272 billion in the month of July 2005.

The imports also registered an increase by 11.93 percent with total imports of $2.234 billion in the month of August as compared to the imports of $ 1.996 billion made during the month of July 2005.

The trade deficit in August of $826.513 million is higher by 14.07 percent when compared to the trade deficit of $ 724.585 million in July of the current fiscal year.

this oil thing is killing us. oil prices must recede to $55 a barrel in the next five to six months. otherwise, pakistan can kiss goodbye to a 7% growth rate.

what does this exactly mean, I mean howmuch growth do we need in exports per month or year to get atleast 50 billion a year export.

Cause 50 billion isn't that much for a country our size

Well, I think WiseKing is referring to Oil Price per Barrel in the market. We had 14 billion worth of export last year. We might see 17-20 Billion this year. If we are close to 20 billion then we are ok since foreign remittance will cover the rest of deficit of trade balance.

Worse Case Scenario

Export = 17 billion
Import = 24 billion
Trade Deficit = 7 billion

Best Case Scenario

Export = 20 billion
Import = 23 billion
Trade Deficit = 3 billion

Remittance will be around between 4-5 billion to close the gap.

Very Very right Mr.Sajid,

As for Usman, yes 50 billion dollars are not much for a country of our size but we were sitting on 8-9 billion dollar exports for many years, this has only happend during past three/four years that we entered the double digit zone. We have to work hard to get 50 billion dollar export a year, that makes it around 4 billion dollars a month on average way beyond our current rate of around 1.4 billion dollars a month. Anyhow we will hopefully cover this distance too.

i would disagree that there is any chance of $20 billion this fiscal year. no economic planner sets a goal for exports with a $3 billion dollar differential. we'll probably hit the 20 billion mark in the next fiscal year. this years exports will definitely reach $17 billion, perhaps getting somewhere near 17.5 billion if one or two sectors shows extraordinary growth. our imports are likely to be 23 billion, or around there, leaving us with a hefty deficit. our remittances will hopefully touch $4 billion, leaving us with a manageable 2 billion deficit. not great, but not bad either.

Yes definitely we wont hit 20 billion this fiscal but in next one 2006-2007.