First quarter services trade deficit narrows down by 76 percent

The country's services trade account continued to perform well as its deficit shrank 76 percent during the first quarter of this fiscal year supported by lower imports. Economists said a massive decline in services trade deficit will reduce pressure on external account. Although, the services sector account is still negative during July-September FY15, however despite that services trade statistics are very encouraging as its imports continue to decrease, they added.
Arrival of Coalition Support Fund (CSF) has also largely contributed to a lower services deficit. Pakistan received two tranches of CSF amounting to $713 million in first quarter of this fiscal year. In addition, lower transport and travel payments have curtailed the services import bill. According to State Bank of Pakistan (SBP) the country's services sector trade registered a deficit of $155 million during July-September FY16 compared to $658 million in the same period of last fiscal year (FY15), depicting a notable decline of 76 percent or $503 million.
A detailed analysis revealed that during the period under review, services sector imports registered a healthy decline of 28 percent supported by lower oil prices, which reduced transport and travel charges. Pakistan's services sector imports stood at $1.737 billion in the first quarter of FY16 against $2.4 billion in the corresponding period of FY14, down $665 million.
Similarly, services sector exports also witnessed a declining trend and fell by 9 percent or $162 million during the period under review. Services imports declined to $1.582 billion in July-September of FY16 compared to $1.744 billion in the same period of FY15. Month-on-month basis, during September 2015, services trade performed well and posted $115 million surplus with $647 million exports and $532 million imports.
Among imports, a major fall was registered in transport and travel. With 45 percent decline, transport import bill declined to $645 million in first quarter of FY16 compared to $1.16 billion in the same period of FY15. During the period under review travel bill stood at $377 million down from $458 million. During the last fiscal year (FY15), services trade deficit narrowed down slightly by 5 percent to $2.5 billion with $5.741 billion exports and $8.258 billion imports.