Pakistans recorded a whopping $5.1 billion trade deficit in November—the highest for a single month—as imports continued their surge, touching around $8 billion, an increase of about 94 percent in comparison to the same month last year
Pakistans recorded a whopping $5.1 billion trade deficit in November—the highest for a single month—as imports continued their surge, touching around $8 billion, an increase of about 94 percent in comparison to the same month last year. The data came days after Prime Minister Imran Khan admitted that a widening trade deficit forced his government to go to the International Monetary Fund (IMF).
This is the fifth consecutive month that saw a surging trade deficit, mainly resulting from the exponential rise in imports in comparison to exports. Despite several measures, the government has so far failed to clip rising imports. Even in November, imports recorded triple the growth that of exports.
Officials, however, claimed the economy is on a good track, pointing to rising exports—a practice that the government has continued for almost a year now. Officials deliberately ignore mentioning exponential growth in imports and rising ballooning trade deficit.
On Wednesday, Abdul Razak Dawood, advisor to the prime minister on commerce, in a tweet merely mentioned growth in exports, adding the import data was being analyzed.
In the last fiscal (FY 21, which ended in June), the trade deficit widened by 32.9 percent, posting around $30 billion difference between imports and exports. In July, the first month of the current fiscal, it was around $ 3 billion, only to increase to $4.05 billion in August.
Overall, in the first quarter of the current fiscal year, July-Oct 2021, the trade deficit stood at $15.525 billion--registering an increase of 103.8 percent from $7.617 billion it had recorded last year during the same period.
Pakistan recorded the highest trade deficit in FY18, close to $37 billion. That record may be broken this year if the trend continues like this—that, however, would be an extremely difficult situation for Pakistan.
So far remittances from nonresident Pakistanis have helped manage the trade deficit. However, in the long run, the growth in the trade deficit would certainly surpass the limit beyond which it could not be managed by remittance. A few weeks ago, PM Khan had asked his advisors to treat overseas Pakistanis like VIPs as remittances sent by them were sustaining the country’s economy. Khan also directed his officials to chart out plans so that wealthy overseas Pakistanis could easily invest their money in the country.
The remark came after Khan, in a rare admission, acknowledged the issue of the widening trade deficit.
In October, Shaukat Tareen, special advisor to the prime minister on finance, had also admitted overheating in the economy, mainly driven by consumption. After the pandemic, the government pumped cash through many relief packages, which as a result increased imports.