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Trade deficit surges by 134pc

FOOLS_NIGHTMARE

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Pakistan’s merchandise trade deficit in May ballooned by 134 per cent from what it was a year ago on the back of lower export proceeds and higher than expected imports, commerce ministry data showed on Wednesday.

The monthly deficit reached $3.432 billion in May 2021 from $1.467bn a year ago raising fear it will create a problem for the government in controlling external accounts. In rupee terms, the trade deficit was posted at 125.2pc on a year-on-year basis.

The trade gap has been widening since December 2020. The surge in trade deficit is mainly led by exponential growth in imports with comparative slow growth in export proceeds from the country.

Between July and May 2021, the trade gap widened by 29.5pc to $27.275bn in the 11 months of 2020-21 from $21.065bn over the corresponding period of last year.


While in FY20 the country’s trade deficit had narrowed to $23.099bn from $31.820bn, this target was already crossed in 10 months of FY21, indicating serious pressure on the external side due to rising imports.

The import bill went up by 77.8pc to $5.090bn in May 2021 from $2.863bn over the corresponding month of last year. On a month-on-month basis, the import bill decreased by 3.23pc.

Between July and May FY21, the import bill increased by 22pc to $49.839bn this year as against $40.866bn over the corresponding months of last year.

The import bill is rising mainly due to the increased imports of petroleum, wheat, sugar, soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres and antibiotics and vaccines.

Last month the import of duty-free imports posted growth of 73.78pc and dutiable imports grew 94.84pc on a year-on-year basis. It clearly reflects that the robust growth in duty-free imports is mostly related to raw materials and semi-finished products duty on which duties and taxes were exempted in last year’s budget.

The increase in dutiable imports is because of an increase in regular imports of smuggled prone items such as tyres, textiles and tea. As a result, the customs duty collection in the month under review also posted robust growth.

The continuous decline in imports in the first two years of the incumbent government had provided some breathing space to the government in managing external accounts despite the downward trend in exports. However, rebounding imports are likely to create pressures on the external side.

The growth in remittances at the movement will be sufficient to finance the import bill.

However, it is believed that the current account deficit in FY21 will remain in the range of $4bn to $6bn by the end of June.

Exports posts a growth year-on-year 18.7pc to $1.657bn in May 2021 from $1.396bn over the last year. On a month-on-month basis, exports dipped by 25.3pc. The month-on-month dip is mainly because of a substantial drop in exports proceeds in May despite lower base in May 2020 that provided a lower base for higher growth.

In reality, the month-on-month decline is a worrisome factor for policymakers.

However, in the 11 months of FY21, export proceeds rose by 14pc to $22.563bn as against $19.801bn in last year’s corresponding period.

Adviser to the prime minister on commerce Abdur Razzak Dawood in a statement said the credit of this increase in export proceeds went to the exporters for maintaining the momentum of country’s exports during a year marred by contraction and uncertainty in major markets.

Mr Dawood said the dip in exports to below $2bn mark was because of the extended Eid holidays, aimed at curtailing the spread of Covid.

The value-added sector has already warned the government about a possible shortage of raw materials in coming months. The stakeholders warned the government that if cotton yarn was not made available in the required quantity, export orders in hand would eventually be diverted to rival countries. In the last Economic Coordination Committee meeting, the government had exempted duty and taxes on the import of cotton yarn.

 

AZ1

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As long as it keeps you HAPPY I don't mind. This bhagora party is the biggest Achilles heel for the establishment and its sidetracks.:enjoy:
yeah hahah pdm mai larai hogaye right?

pakistanis are better without pmln existance and their supporter.

pmln dont even allow overseas rights of voting.

This is why ppl loves pti specially overseas
 

FOOLS_NIGHTMARE

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This is why ppl loves pti specially overseas
I agree with this point completely regarding our diaspora. Those who are left in Pakistan are true MUJAHIDS and sons of the soil, their sacrifices and patience will be rewarded very soon.
 

PakShaheen79

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If you want to talk about economy then plz discuss what current account situation is saying as this is the measure of total USD inflow vs. total USD outflow. Yes, in trade we are facing a deficit, but that's going to be covered well in current account as workers remittances are constantly on the rise. This year estimate is around 29 Billion USD till the end of June.
 
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that is a great observation, yet there was no corona and Oil prices were low too in tooi party tenure yet it exported less than nakami peepee. how did that work?
You tell me Mr Technocrat, how did the previous two Governments managed to cumulatively increase the Nominal GDP by $143.34 billion as per IMF figures?
 

Patriot forever

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You tell me Mr Technocrat, how did the previous two Governments managed to cumulatively increase the Nominal GDP by $143.34 billion as per IMF figures?
Hmmm it is common knowledge not rocket science . Artificially manipulate currency.

If you calculate todays gdp of 47.7t keeping dollar at 120 its almost $400b.

All that this governemnt needs to do is throw in a billion dollars in the market and behold your gdp increased by 100b. Isnt this magic 😍

Bro gdp in dollar is a benchmark for countries who have stable market based currency like India Bangladesh Malaysia or most of the world.

For countries that manipulate currency gdp in local currency is a better stable benchmark.
 
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Path-Finder

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Oh no, no Huzoor. This nacheez banda would rather learn from the Great Murshid like yourself. Please Ya Ustaad, illuminate us with your words of Hikmat.
no no no, all those qeema walay naan and thondi bottle, biryani you ate from the amritasari kabaria's. Its time to payback the tubbar's food offerings by defending the tubbar. don't do bewafai to the tubbar since followers of tubbar care more about the tubbar than nation. sad that mian cant take its poojari with it to London.
 

Joe1351

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Someone managed to write an article about trade deficit without mentioning "China" anywhere. His boss must be happy.
 
Apr 22, 2019
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... For countries that manipulate currency gdp in local currency is a better stable benchmark.
Oh I see. So for seven-decades, all those tyrants and Prime Ministers who defended and protected the Rupee were all wrong.

Just like 21 Prime Ministers before PM Imran Khan did not allow Indian Occupied Kashmir to be annexed due to full scale war deterrent, were all wrong too. Simply because they didn't lose it, meant they didn't scream to the international community for help like this loser does for losing it.

Are you that naive that you believe this is the reason for having a strong Rupee and weakening it automatically increase exports?

Do you remember when Zimbabwe was printing one hundred trillion Zimbabwean dollar notes?

 
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Patriot forever

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Oh I see. So for seven-decades, all those tyrants and Prime Ministers who defended and protected the Rupee were all wrong.

Just like 21 Prime Ministers before Cartoon-e-Azam PM Imran Khan did not allow Indian Occupied Kashmir to be annexed due to full scale war deterrent, were all wrong too. Simply because they didn't lose it, meant they didn't scream to the international community for help like this loser does for losing it.

Are you that naive that you believe this is the reason for having a strong Rupee and weakening it automatically increase exports?

Do you remember when Zimbabwe was printing one hundred trillion Zimbabwean dollar notes?


Bro who told you rupee was artificially maintained for 7 decades?
The REER value of rupee never exceeded 110 (on the higher side) during musharraf or even ppp era. It was plmn tenure in which REER crossed 130 threshold for the first time, and opened the flood gates for BoP crisis.

Zimbabwe is printing those notes because of bankrupcy due to BoP crisis same as what you see now in Lebanon, or what happened in argentina. This is due to buying more stuff than you can afford. Artificially manipulated currency leads to BoP crisis to bankrupcy, and when the bubble bursts this is what happens.

You should be thankful that Pakistan contained its BoP crisis before it got out of hand otherwise you would be seeing a million pkr note.
 

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