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.PM’s aide says government has set $38.7bn export target for FY22
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.