ISLAMABAD: Amid surging trade deficit, Finance Minister Shaukat Tarin on Monday asked the commerce ministry to conduct sensitivity analysis and build scenarios for effective forecasting both in imports as well export for each month of the year.

The first two months (July and August) of FY22 saw a ballooning trade deficit of 119.94 per cent to $7.491 billion against $3.406bn over the last year. It was largely driven by a sharp increase in the country’s imports compared to exports.

The widening trade gap is building up pressure on the external side, but the government officials believe that increase in remittances, growth in export proceeds and Roshan Digital Account will help mitigate the pressure to a large extent.

Chairing a meeting to review the trade balance situation, Mr Tarin observed that the economy was in a state of growth as it had expanded by 4pc in FY21 and there was an increased demand for imports. “As long as trade deficit is within a sustainable level, it will stimulate economic recovery,” he added.

The meeting was attended among others by Minister for Economic Affairs Omar Ayub Khan and Governor State Bank of Pakistan Dr Reza Baqir. Commerce Adviser Abdul Razak Dawood participated through a video link.

Mr Tarin said that the prudent policies had stimulated economic recovery amid Covid-19 pandemic. “Economy is heading in the right direction. The enhanced revenue collection along with improved ratings (Business Confidence Index and by international credit rating agencies) indicate that economy has gained momentum and is geared towards an inclusive and sustainable economic growth.”

Secretary Commerce Sualeh Faruqui briefed the meeting about the trade balance situation over last two months. Considering, the expansion in economic activity, import of one-time items like vaccine for Covid-19 as well as increased demand for raw materials have resulted in increasing imports during July and August.

The exports of value-added and non-traditional products saw an increase in August owing to government support for the sector, the commerce ministry data showed on Monday.

The exports of home textile posted a growth of 50pc in August, men’s garments 47pc, cotton fabric 31pc, rice 43pc, jerseys and cardigans 63pc, fruits and vegetables 63pc and tea shirts 56pc compared to the corresponding month of last year.

The data showed that decreasing trend was noted in the export of mostly non-value-added products. The exports of surgical instruments decreased by 4pc, fish and fish products 24pc, cement 56pc, tents and canvas 24pc and wood and articles 67pc, respectively.

On a Geographical basis, the exports to the USA surged 60pc, China 109pc, UK 20pc, Netherlands 46pc, Germany 13pc, Spain 60pc. However, Pakistan’s exports to Afghanistan dipped 38pc, Denmark 24pc, South Korea 32pc, Indonesia 20pc, Singapore 77pc and Czech Republic 32pc.

Secretaries of the ministry of commerce, information technology, finance division, executive Director General Board of Investment and other senior officers also participated in the meeting.

Published in Dawn, September 7th, 2021