Trade deficit shrinks 27pc to $3.2bn in August

ISLAMABAD: Pakistan’s trade deficit in August narrowed by 27 percent from the same period in 2021, helped by efforts to curb imports which would further ease pressure on the current account balance, the finance minister said on Thursday.

Imports fell by 13 percent in August while exports gained 13 percent, narrowing the monthly trade deficit slightly more than expected.

“The trade deficit stood at $3.2 billion in August,” Finance Minister Miftah Ismail said in a Tweet.

“As per FBR imports in August 2022 were $5.7 billion which were down by 13 percent from the last year.”

The minister said energy imports were up 5 percent to $2 billion while non energy imports were down 21 percent to $3.6 billion.

“The exports were $2.5 billion up by 13 percent. The trade deficit was $3.2 billion, down by 27 percent.”

Remittances were up 2 percent to $2.7 billion.

“The exports plus remittances still shy of imports but we will get there,” the minister said. The central bank and Pakistan Bureau of Statistics are yet to post their August data.

Analysts said data indicates that the import compression measures taken by the government have firmly taken hold and are now effectively curtailing imports as per policy regime of the government.

The government, in May last banned imports of all non-essential luxury goods to avert a balance of payments crisis after the central bank reserves had fallen as low as $7.8 billion.

The country’s major imports including fuel, edible oil and pulses were exempted from the ban.

Imports fell by more than a third in July after a ban on non-essentials goods. July imports fell to $5 billion, down 35% from June's record monthly high of $7.7 billion.

Last month the government lifted the ban, except for automobiles, cell phones and home appliances. But such items were heavily taxed. The government imposed a series of regulatory duties on a number of items to slow imports.

Analysts said the trade balance has also benefited from a fall in global oil prices which has eased pressure on the country’s -- a net energy importer – hefty import bill.

In the last fiscal year, the trade deficit had surged to an all-time high of $48.66 billion, up from $30.96 billion a year ago, a significant 57 percent jump on the back of higher-than-expected imports.