Pakistan trade deficit increases to $2,968bn in March

Pakistan trade deficit has increased by 97.6 per cent in March, Ministry of Commerce data showed on Thursday.

The deficit has increased from $1.502bn to $2.968bn. On a month-on-month basis, the trade deficit grew by 17.77pc.

The trade gap is widening since December 2020. In February, it swelled by 23.93pc to $2.52bn against $2.03bn over the corresponding months of the last year.

Commerce Advisor to Prime Minister (PM) Imran Khan, Abdul Razak Dawood tweeted: “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, antibiotics, and vaccines.” The surge in trade deficit is mainly led by higher growth in imports with lower growth in exports in March 2021.

The imports in March 2021 grew to USD 5,313 million which is mainly due to increased imports of Petroleum, Wheat, Soy Bean, Machinery, Raw Material & Chemicals, Mobiles, Fertilizers, Tyres and Antibiotics & Vaccines in March 2021.

— Abdul Razak Dawood (@razak_dawood) April 1, 2021

The decline in imports in the last two years had provided breathing space to the government to manage external accounts despite a downward trend in exports. But, reboun­ding imports would likely create pressures on the external side.

It seems that the rise in imports will put lots of pressure on the incumbent government. However, the growth in remittances will balance against the import bills.

Unofficially, it is believed that the current account deficit in FY21 will remain in the range of $4bn to $6bn by end of June.

According to Mr Dawood, the growth in exports in March is the highest in the last ten years. This is also the first time since 2011 that exports have crossed $2bn the mark for six consecutive months.

The Economic Coordination Committee of the cabinet had allowed the import of cotton and cotton yarn from India, but the decision was reversed one day after by the federal cabinet chaired by PM Imran.

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.