During July-Nov: Services sector's trade posts $1.16bn deficit

RIZWAN BHATTI

KARACHI: The services sector's trade has posted a deficit of 1.16 billion dollar, up by 18 percent, during the first five months of current fiscal year mainly due to high imports and slowdown in exports.

The State Bank of Pakistan (SBP) has revealed that services sector's trade statistics are again deteriorating and deficit of services trade, which was on decline during the fiscal year, has registered an increased of $182 million during first five months (July-Nov) of fiscal year 2011-12. According to SBP, services sector's deficit surged by 18 percent to $1.166 billion during July-Nov of current fiscal year compared with $984 million in corresponding period of last fiscal year.

The detailed analysis indicates that exports and imports of services sector are not performing well as the exports are on decline and imports are increasing gradually.

During the period under review exports of services sector have posted a decline of $15 million. With a slight decline about one percent, the services sector exports stood at $2.023 billion in the first five months of current fiscal year compared with $2.038 billion in the same period of last fiscal year.

However, services sector imports have registered a growth of 6 percent during the period under review. Overall services sector imports reached $3.189 billion during July-Nov of current fiscal year against imports of $3.022 billion in corresponding period of last fiscal year, depicting an increase of $167 million dollar.

Analysts said that the massive increase of over 18 percent in services sector deficit during the first five months was a matter of concern and policy makers should develop a long term policy to curtail the higher deficit of services sector. Otherwise, the rising services sector's deficit will directly hurt the current account balance, as the deficit posted an increase of 257 percent in July-Nov 2011.

They said that high payments on account of government service, transportation, travel and information technology are responsible for rising services' trade deficit.

The services sector's deficit on month-on-month basis for Nov 2011 stood at $200 million with $376 million exports and $576million imports.

The country has earned $636 billion on account of transportation services, $141 million from travel, $76 million from communication, $9 million from construction services, $102 million from Information Technology (IT), $28 million through financial services and an amount of $691 billion have been earned on account of government services during July-Nov of fiscal year 2011-2012.

On the other hand transportation payments stood at $1.506 billion, travel $547 million, communication $61 million, construction $13 million, insurance $102 million, financial sector $44 million and IT sector payments stood at $64 million during the period under review. In addition, some $58 million was paid on account of royalties and $307 million were paid for government services.