Over 31 percent rise in Jul-October trade deficit

ZAHEER ABBASI

ISLAMABAD: Pakistan's trade deficit during July-October period of fiscal year 2011-12 swelled to $6.871 billion, higher by 31.38 percent against $5.230 billion of the same period of last year.

This may have serious repercussions on foreign exchange reserves and exchange rate, analysts said.

Trade figures for July-October 2011-12 released by the Federal Bureau of Statistics (FBS) showed that the country imported goods worth $14.724 billion, almost twice the total exports of $7.853 billion, during the first four months of the current fiscal year.

Analysts say that the rising import bill, largely on account of petroleum products, does not necessarily mean expansion of the economy, as could be in the case of machinery import.

The widening trade deficit may by a source of concern for the economic managers because of its impact on the economy. Analysts say that any external shock could push the economy again to 2008-like situation when the country did not have sufficient foreign exchange reserves to support the balance of payments needs and was compelled to take a bailout package from the International Monetary Fund.

Analysis showed that the country imported goods worth $14.724 billion during July-October 2011-12, up by 20.43 percent from $12.226 billion for the corresponding period of last year.

A comparison between monthly trade data showed that trade deficit in October over September 2011 narrowed by 4.20 percent on account of slight increase in exports and minor decrease in imports. Exports of $1.896 billion in October 2011 were 3.27 percent higher from $1.836 billion exports of September 2011 and imports of $3.607 billion in October 2011 have been 0.41 percent less from $3.622 billion for month of September 2011.

Analysis of data showed an increase of 36.01 percent in trade deficit during October 2011 over the same month of corresponding year. The trade deficit during October 2011 stood at $1.711 billion compared to $1.258 billion for October 2010 with exports dipping by 2.17 percent, and imports growing by 12.86 percent during the period under review. In the month of October 2011, exports declined to $1.896 billion compared to $1.938 for October 2010 and imports have increased to $3.607 billion in October 2011 from $3.196 billion during the same month a year ago.