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Trade deficit doubles to $24.78 billion, but import growth shows signs of slowing

FOOLS_NIGHTMARE

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  • Pakistan's trade deficit up 100% YoY to stand at $24.78 billion in first half of fiscal year 2021-22.
  • The trade deficit in December 2021 alone was up 57% to $4.1 billion from $2.6 billion in the same month last year.
  • Imports increased 37.9% YoY to stand at $6.901 billion, up from $5.005 billion in December 2020.
KARACHI: Pakistan's trade deficit is currently up nearly 100% at $24.78 billion so far in fiscal year 2021-22, from $12.36 billion in the previous fiscal year's corresponding half, provisional data indicates.

According to the most recent official numbers on external trade, the trade imbalance in December 2021 alone increased by 57% to $4.1 billion from $2.6 billion in the same month last year. However, it also bears mentioning that the monthly deficit was down 18% compared to November's reading.

According to the Ministry of Commerce, early signs indicate that import growth has slowed. "Imports declined to $6.9 billion in December 2021 from $7.9 billion in November 2021, a decrease of $1 billion," the ministry said, adding that the target for December 2021 imports had been $6.2 billion.

Imports were up 37.9% year-on-year to $6.9 billion from $5.005 billion in December 2020. Meanwhile, Pakistan's exports rose 16.7% to $2.761 billion in December 2021, up from $2.366 billion in the same month last year, an almost $400 million gain, according to data.

The month's export target was $2.8 billion.

Exports have climbed by 25% to $15.125 billion in the first half of the current fiscal year, up from $12.11 billion in July-December 2020. The export target was $15 billion for the period.

The persistent expansion in the trade deficit has been caused by a substantial increase in import costs, which might push the current account deficit above $10 billion.

In FY18, the trade deficit had reached an all-time high of $37.7 billion. Government measures, however, resulted in a decrease to $31.8 billion in FY19 and $23.183 billion in FY20. The trend reversed in FY21, with the trade deficit again expanding to $30.796 billion.

The trade deficit has been expanding since December last year, owing primarily to an exponential increase in imports and relatively slow growth in exports. To rein in surging imports, the government has imposed taxes on luxury items, while the central bank has increased required cash margins on the import of different items to discourage their import.

Adviser to the Prime Minister on Commerce and Investment, Abdul Razak Dawood, chaired a consultative meeting to discuss trade patterns in December 2021, during which he was briefed of the latest indications.

He was informed that, based on current statistics, significant product and regional diversification occurred in December 2021. Fish products exports climbed, as did plastics, cement, fruits and vegetables, petroleum products, and natural steatite exports.

Exports to Bangladesh, Thailand, Sri Lanka, Malaysia, Kazakhstan, and South Korea, among other countries, increased. Exports of men's clothing, home textiles, rice, and women's apparel, jerseys and cardigans, and t-shirts increased.

According to the adviser's inquiry, Pakistan's exports to the United States, China, the Netherlands, and Spain increased in December 2021, while shipments to the United Kingdom, Germany, Afghanistan, Saudi Arabia, the Russian Federation, Indonesia, and the Czech Republic fell.

Additionally, exports of fruits and vegetables, surgical instruments, electrical and electronic equipment, tractors, pearls, and precious stones declined in December 2020 compared to the previous year's same month.

Dawood expressed satisfaction with the increase in exports during the first half of this fiscal year. He encouraged Ministry of Commerce officials to closely monitor export growth to ensure that momentum was maintained and that necessary interventions were taken as needed.

 

CrazyZ

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Energy imports are the main issue....also a big source of inflation. Sad reality is Pakistan can easily increase its domestic energy production to address these issues. Thar coal costs only $20 per ton to extract....far cheaper then imported coal. It can be a substitute for natural gas in many industries. Solar costs are low and resources plentiful. IMO, imported oil and gas should be heavily taxed with proceeds going to boost domestic energy production. Trade deficit would be gone in no time.
 

ziaulislam

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Energy imports are the main issue....also a big source of inflation. Sad reality is Pakistan can easily increase its domestic energy production to address these issues. Thar coal costs only $20 per ton to extract....far cheaper then imported coal. It can be a substitute for natural gas in many industries. Solar costs are low and resources plentiful. IMO, imported oil and gas should be heavily taxed with proceeds going to boost domestic energy production. Trade deficit would be gone in no time.
2.5b$ of vaccine imports

We needed to manfactuer these our self may be the sinnopharm or something

But we have zero capacity and this is a shame for 4th largest country
Also uncle sam has stopped over 2b$ of aid that we use to get from 2001 to 2018
Mini budget passing will raise GST on Solar to 17% from ( I think ) 0%.
Solar In Pakistan will lose its competitive edge against oil gas and coal
Solar panels need to be manfactured here..GST should be added
 

ziaulislam

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Lastly

Noone cares about trade deficit numbers in short run..

We care about exports(as indicator of long term trade deficit prediction), CAD and total inflows

Long run yeah this is important

For example if u r setting up alot of industry your imports will ballooon but so will your inflows due to financial arrangements and your exports

Are exports and inflows growing at 10% is the question? (I mean positive 10% not negative 10% like in 2013-2018)
 

RangeMaster

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Thanks to my great leader. Exports boosted from mere $24 billion to 21000 million dollars from 2013 - 18.


2.5b$ of vaccine imports

We needed to manfactuer these our self may be the sinnopharm or something
Vaccine imports this month stood at 700 million. That's impossible...! That's a 100 million doses.
Secondly there are around $100 million/month (for the past few months) imports of fuel & energy products that are vague and not explained.


That's J10Cs, HQ9, VT4s and helis being paid for.
 

ziaulislam

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Thanks to my great leader. Exports boosted from mere $24 billion to 21000 million dollars from 2013 - 18.



Vaccine imports this month stood at 700 million. That's impossible...! That's a 100 million doses.
Secondly there are around $100 million/month (for the past few months) imports of fuel & energy products that are vague and not explained.


That's J10Cs, HQ9, VT4s and helis being paid for.
Not really vaccine cost around 100$
 

Pakistan Space Agency

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Energy imports are the main issue....also a big source of inflation. ...
That has always been the issue.

Thar coal costs only $20 per ton to extract....far cheaper then imported coal. It can be a substitute for natural gas in many industries. Solar costs are low and resources plentiful. ...
How many billions will it cost Pakistan to make their use worthwhile?

2.5b$ of vaccine imports

We needed to manfactuer these our self may be the sinnopharm or something ...
Isn't Pakistan already manufacturing it's own PakVac vaccines for domestic use for the last 6 months?

 

ziaulislam

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That has always been the issue.


How many billions will it cost Pakistan to make their use worthwhile?


Isn't Pakistan already manufacturing it's own PakVac vaccines for domestic use for the last 6 months?

Not because countries dont accept it
Energy was cheaper from 2013-2020
 

KaiserX

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Energy imports are the main issue....also a big source of inflation. Sad reality is Pakistan can easily increase its domestic energy production to address these issues. Thar coal costs only $20 per ton to extract....far cheaper then imported coal. It can be a substitute for natural gas in many industries. Solar costs are low and resources plentiful. IMO, imported oil and gas should be heavily taxed with proceeds going to boost domestic energy production. Trade deficit would be gone in no time.

You think Pakis have patience to pay taxes on oil/coal??? they will be up in arms and willing to support PMLN/PPP than pay their fair share :D
 

CrazyZ

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That has always been the issue.


How many billions will it cost Pakistan to make their use worthwhile?

Past regimes have ignored energy independence as a goal. Imported oil and gas benefit mafias in Karachi that buy off dumb elected politicians (PPP in particular). Thar coal, hydro power, and solar have been ignored for decades....in favor BOP issues and IMF bailouts.

Recent global energy inflation means that Thar coal and domestic Hydro......are the cheapest energy sources for Pakistan. Solar has been declining in prices for years now. Investment in domestic energy production contributes to boosting GDP numbers and job creation. Extraction of Thar coal went from nothing to millions of tons in only a few years (this can easily go up to 100's millions of tons). 1000's of MW's of hydro power are under construction or in planning. Both made possible with Chinese assistance.
You think Pakis have patience to pay taxes on oil/coal??? they will be up in arms and willing to support PMLN/PPP than pay their fair share :D
BOP issues and global energy inflation are the primary drivers for inflation seen by Pakistani consumers. Inflation is the biggest tax. Domestic energy sources are cheaper and hedge imported energy inflation. PMLN/PPP are proven idiots when it comes to these things.
 
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Peaceful Civilian

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Government should impose heavy tax on imported items. It will help to further decrease imports bill. I feel government should impose 40% tax on petrol & diesel, 40% on imported cosmetics items, and 40% on branded mobiles like iphone and Samsung. 150% on cars, and 55% on motorcycles & imported parts.
 

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