ISLAMABAD: The country’s trade deficit during July-October shrank by 1.97 per cent year-on-year to $11.786 billion from $12.02bn, according to latest data released by Pakistan Bureau of Statistics on Friday.

During the period between July-October, exports jumped up by 3.52pc at $7.28bn with imports moving up by a meagre 0.06pc reaching $19.071bn from $19.06bn same period last year.

Pakistan’s economy has been under immense pressure from the declining reserves and dented exports; the PTI government has introduced a range of reforms to curb imports and push up exports but efforts have not brought about the desired results.

Finance Minister Asad Umar has stressed the need to enhance exports to overcome debt or risk more loans from International Monetary Fund.

China promises deeper market access to Pakistani exporters

However, these efforts have not translated into exports, which after peaking in March at $2.31bn, have been on the declining trend during the last eight months, falling to their lowest in September at $1.78bn after a slight growth in August.

The lukewarm growth in exports was also visible during October on yearly basis after it clocked in at $1.9bn up only by a meagre 1.17pc from the same period last year.

The tepid growth in exports comes despite the Rs32bn cash support during the last 18 months to the textile and clothing exporters under a Special Prime Minister Package.

There are also reports that China has agreed to provide deeper market access for Pakistani goods worth $1bn in the current fiscal year but it was not clear when those measures will be taken to boost exports to China under the free trade agreement.

It is, however, pertinent to mention the declining trend in imports. Imports have flattened during the last four months – including October – with a meagre increment of 0.06pc. Y-o-y imports during the outgoing month saw a reversal of 1pc falling to $4.84bn from $4.9bn last year.

The decline in imports can be attributed to the dip in machinery related imports which fell to their lowest in two years at $505m in August. These imports emanated from the ongoing infrastructure and energy related projects under the umbrella of China-Pakistan Economic Corridor.

Exports and remittances are key contributors to country’s foreign exchange reserves. State Bank’s foreign exchange reserves have already fallen to their four and a half year lows to $7.67bn. The declining reserves — enough to cover just one month imports — are at the heart of economic challenges troubling the incumbent government.

Pakistan’s external sector has staged a recovery during the ongoing fiscal year evident in the 13pc jump in inward remittances coupled with the flattening trade deficit and imports.

Published in Dawn, November 10th, 2018