ISLAMABAD: Pakistan’s trade deficit shrank nearly 35 per cent in the first quarter of current fiscal year, driven largely by slight increase in exports and deeper decline in imports of non-essential luxury items.

The constant decline in trade deficit for the third consecutive month shows that government’s battle against swollen trade deficit is finally bearing fruit, data released by the Pakistan Bureau of Statistics showed on Friday.

Further, the quarterly figures showed that the trade deficit fell to $5.72bn from $8.79bn over the corresponding period last year, reflecting a decline of $3.07bn or 34.85pc.

On a monthly basis, the trade deficit decelerated by 24.58pc to $2.01bn in September as against $2.67bn over the corresponding month last year.

The government has set a target to bring down annual trade gap to $27.476bn by June 2020. In the year 2018-19, the country’s trade deficit narrowed to $31.82bn, registering a decline of 15.33pc.

In a tweet, Adviser to PM on Finance Hafeez Shaikh said that because of the stabilisation measures, the government has achieved the desired results. “The reforms initiated in trade and taxes have helped the government to achieve the desired results”, he said while adding that, “we have achieved real progress last year to create a platform for sustainable development”.

Shaikh said the cut in imports has helped in reducing the current account deficit in the first two months of FY20. The decline in imports came on the back of government’s interventions to arrest the rising import bill of non-essential luxury items even though export proceeds posted a mixed trend during the same period. Exports posted a paltry growth of nearly 3pc in the first quarter.

Data showed imports in the first quarter of current fiscal year clocked in at $11.24bn, down 21pc from $14.16bn over the corresponding period last year. The decline in value of imported goods in September is nearly 14pc to $3.78bn as against $4.39bn over the corresponding month last year.

It is worth mentioning that imports have remained well above the $3bn mark since October 2016 and have risen consistently over the period peaking at $5.8bn in May 2018. The incumbent government has taken several measures to curtail rising import bill since coming into power in August 2018. In the budget 2019-20, the government waived off duty on import of 1,639 raw materials to facilitate industrial growth in the country.

Contrary to this, Pakistan’s exports grew by 2.75pc to $5.52bn in July-September, from $5.37bn during the same period last year. The numbers are massively discouraging, as exports, which should have grown over the last few months owing to multiple currency depreciations, have failed to pick up.

On monthly basis, exports in September were up by 2.67pc to $1.76bn from $1.72bn over the corresponding month last year.

It is projected that cumulative exports during the ongoing fiscal year are likely to reach $26.187bn, up from $24.656bn in FY19.

The government has already reduced the cost of raw materials and semi-finished products used in exportable products by exempting them from all customs duties.

Adviser Shaikh said in his tweet that textile industry achieved 26pc growth in quantitative terms. He said the textile sector is the backbone of the country’s export portfolio and government is working with the stakeholders to further enhance productivity and increase value added exports.

Published in Dawn, October 12th, 2019