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Alarm bells ringing as trade deficit hits $3.058bn in July

FOOLS_NIGHTMARE

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The government’s battle against bloated trade deficit is reversing as it widened 81.4 per cent in the first month of the current fiscal year (FY22), driven largely by almost double increase in imports compared to exports from the country.

Merchandise trade deficit reached $3.058 billion in July this year against $1.686bn over the corresponding month last year, according to data shared by the Ministry of Commerce on Monday.

Trade deficit reached an all-time high of $37.7bn in FY18. However, the government’s measures led to a drop in trade deficit to $31.8bn in FY19 and $23.183bn in FY20. The trend reversed and trade deficit was recorded at $30.796bn in FY21.

PM’s aide says government has set $38.7bn export target for FY22
Trade gap has been widening since December 2020, mainly led by exponential growth in imports and comparatively slow growth in exports.


The import bill in July this year went up 46.6pc to $5.405bn against $3.687bn over the corresponding month last year. In the outgoing fiscal year (FY21), the import bill surged by 25.8pc to $56.091bn from $44.574bn the previous year. On a month-on-month basis, the import bill increased by 10.69pc.

The import bill is also rising mainly due to increased imports of petroleum, soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres and antibiotics and vaccines. The growth in remittances at the moment will be sufficient to finance the import bill.

Exports posted a growth year-on-year by 17.3pc to $2.347bn in July 2021 against $2.001bn over the corresponding month last year. On a month-on-month basis, exports of merchandise dipped by 13.64pc. Export proceeds went up 18.2pc to $25.294bn in FY21 from $21.394bn over the last year.

Adviser to the Prime Minister on Commerce Razak Dawood has said the government sets an export target of $38.7bn for the current fiscal year.

Addressing a press conference along with PM’s special assistant Shahbaz Gill here on Monday, he said exports had touched the highest-ever mark of over $25bn in FY21.

Mr Dawood said the export target of commodities for FY21 was $25.3bn and that of services was $6bn. He said the highest-ever export of IT services was recorded in the outgoing fiscal year, which grew by 47pc to $2bn.

For the current fiscal year, he said the commerce ministry projected $31.2bn worth of goods and $7.5bn of services exports.

Mr Dawood said the government was focusing on the export-oriented policy, besides pursuing a policy of “Make in Pakistan” to encourage the local industry and make locally produced goods internationally compatible for exports.

 

ziaulislam

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as long as the govt can keep the CAD not trade defict to 6-8 billion dollars it should be fine

occasionally the economy can handle bigger deficits when its growing fast, the key is government shouldn't artificially interfere by propping up the rupee, if the economy cant handle it you wills ee a drop in rupee value
 

Ali_Baba

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A portion of the change must be due to large imports of Covid related items including vaccine and ppe imports, so short term affects.
 

Genghis khan1

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Largest import bill belongs to Oil and gases. International Oil and gas prices are back on the rise after historical lows last year. Pakistan needs to get off imported oil and gas and utilizes Hydropower for it’s energy needs.

Pakistan needs to divert max funds to Hydroelectric project instead of imported fuels.
 

khail007

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Since last half a century such alarm bells are ringing and will go on, but nothing happens.
People of Pakistan are very familiar to such bells / traffic horns / noises, now they don't bother.
 

python-000

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The government’s battle against bloated trade deficit is reversing as it widened 81.4 per cent in the first month of the current fiscal year (FY22), driven largely by almost double increase in imports compared to exports from the country.

Merchandise trade deficit reached $3.058 billion in July this year against $1.686bn over the corresponding month last year, according to data shared by the Ministry of Commerce on Monday.

Trade deficit reached an all-time high of $37.7bn in FY18. However, the government’s measures led to a drop in trade deficit to $31.8bn in FY19 and $23.183bn in FY20. The trend reversed and trade deficit was recorded at $30.796bn in FY21.


Trade gap has been widening since December 2020, mainly led by exponential growth in imports and comparatively slow growth in exports.


The import bill in July this year went up 46.6pc to $5.405bn against $3.687bn over the corresponding month last year. In the outgoing fiscal year (FY21), the import bill surged by 25.8pc to $56.091bn from $44.574bn the previous year. On a month-on-month basis, the import bill increased by 10.69pc.

The import bill is also rising mainly due to increased imports of petroleum, soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres and antibiotics and vaccines. The growth in remittances at the moment will be sufficient to finance the import bill.

Exports posted a growth year-on-year by 17.3pc to $2.347bn in July 2021 against $2.001bn over the corresponding month last year. On a month-on-month basis, exports of merchandise dipped by 13.64pc. Export proceeds went up 18.2pc to $25.294bn in FY21 from $21.394bn over the last year.

Adviser to the Prime Minister on Commerce Razak Dawood has said the government sets an export target of $38.7bn for the current fiscal year.

Addressing a press conference along with PM’s special assistant Shahbaz Gill here on Monday, he said exports had touched the highest-ever mark of over $25bn in FY21.

Mr Dawood said the export target of commodities for FY21 was $25.3bn and that of services was $6bn. He said the highest-ever export of IT services was recorded in the outgoing fiscal year, which grew by 47pc to $2bn.

For the current fiscal year, he said the commerce ministry projected $31.2bn worth of goods and $7.5bn of services exports.

Mr Dawood said the government was focusing on the export-oriented policy, besides pursuing a policy of “Make in Pakistan” to encourage the local industry and make locally produced goods internationally compatible for exports.

Ppp done his job by destroy Karachi commercial & economical hub of PAKISTAN welldone ppp...:(
 

TheDarkKnight

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This should calm the alarm bells raised by dawn and geo:


So with remittances of $2.71billion the CAD is just $300 million which is very good and manageable. I hope we keep it in few hundred millions ever moth going forward as well, so by end of the year we may have a fiscal CAD of 3-4 billions only, instead of $20 billion left as a gift by PMLN regime in their last FY.
 
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ACE OF HEARTS

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1. Ban imports of luxury goods / eatables ASAP.

2. Medicines and Vaccines production should be completely localized especially western companies should source raw materials locally
 

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