Pakistan Trade Deficit Widens To $32 Billion

Pakistan’s trade deficit widened by a staggering 82 per cent year on year to reach USD 31.96 billion as per the data released by the Pakistan Bureau of Statistics on Wednesday.

The upward trend in the trade deficit was witnessed for the eighth consecutive month owing to an unprecedented increase in imports while exports stagnated at around USD 2.5 billion to USD 2.8 billion a month, mostly of semi-finished products and raw material, The Dawn reported.

This comes at a time when Pakistan’s Current Account Deficit (CAD) rose to an all-time high of USD 2.56 billion in the month of January 2022. CAD is the difference between a country’s foreign expenditure and income.

The trade deficit reached an all-time high of USD 37.7 billion in Financial Year 2018. However, the deficit dropped to USD 31.8 billion in FY19 and USD 23.183 billion in FY20. The trend then reversed and the trade gap jumped to USD 30.8 billion in FY21 and is expected to reach an all-time high during the ongoing fiscal year.

The deficit is expected to rise further in the wake of rising crude oil and wheat prices, which constitute a major part of Pakistan’s imports. At the same time, foreign remittances from gulf, which are a major contributor to Pakistan’s foreign exchange, declined by USD 376 million or 15 per cent over the previous month in January 2022. In addition, exports too declined by 17 per cent over the previous month in January 2022.

Amid this, the country’s Foreign Debt has jumped to a record USD 13.1 billion in the first seven months of the current fiscal year rising by a massive 20 per cent during the first half of the current fiscal (2021-22).

“Pakistan remains vulnerable to possible flare-ups of the pandemic, tighter international financial conditions, a rise in geopolitical tensions, as well as delayed implementation of structural reforms,” International Monetary Fund (IMF) noted in a staff report prepared before the release of a USD 1 billion to the country. (ANI)