Trade Deficit Increases Due to Higher Imports in September 2020
Pakistan’s trade deficit went up by 19.5% to $2.39 billion during September 2020 as compared to $2 billion in the same period in 2019.
The uptick in the trade deficit was seen due to a 13.2% year on year increase in imports to $4.26 billion in September 2020 as compared to $3.76 billion in the same period last year. However, exports saw an increase of 6.1% to $1.87 billion during September 2020 as compared to $1.76 billion.
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities while commenting on the trade figures said:
The double-digit growth in imports is expected as economic activity resumes and aggregate demand increases. However, a sustained double-digit would be hard to sustain given the paltry growth in exports.
Dr. Aadil Nakhoda, an economist and Assistant Professor at IBA, Karachi, told ProPakistani:
Volatility seems to be the name of the game during this recovery. The uncertainty will remain. However, the uptick in import figures shows that demand-side effects are also in play. Maybe it is linked with the improved confidence levels in recent survey figures.
The issues faced by the exporters in August may have subsided in September. The trend in disaggregated figures will be interesting, Nakhoda added.
Pakistan’s trade deficit went up by 2.02% to $5.8 billion as compared to $5.69 billion in the first quarter of the current fiscal year of 2020/21 (July-September) as both exports and imports showed a marginal decrease and increase.
The country’s exports during July-September 2020 fell by 0.94% to $5.46 billion as compared to $5.51 billion in the same period last year. The PBS data revealed that during the period, the country’s imports witnessed a growth of 0.56% to $11.26 billion as compared to $11.20 billion.
On a month-on-month (MoM) basis, according to the PBS, the country’s exports jumped by 18.24% from $1.58 billion in August 2020 to $1.87 billion in September 2020.
Exports made a recovery in September after a double-digit fall in August as the end of lockdown is leading to clearance of export orders in the backlog and economic activities are going back to normal.
The imports during September 2020 compared to the previous month also witnessed an increase of 28.28 percent from $3.324 billion to $4.264 billion. Trade deficit on MoM basis also went up by 37.41% from $1.74 billion in August 2020 to $2.39 billion in September 2020.
In order to improve the balance of payments, the government used to discourage imports in the country.
However, revising its policy, the government abolished the import duties on 41% of industrial raw materials, which are more than 1,600 tariff lines, in September.