Pakistan’s trade deficit showed a notable decrease of 12.3% in the fiscal year 2024, dropping to $24.09 billion from $27.47 billion recorded in FY23, according to recent data released by the Pakistan Bureau of Statistics (PBS) on Tuesday.
The fiscal year, spanning from July 2023 to June 2024, witnessed contrasting trends in exports and imports. Total exports surged by 10.54%, reaching $30.645 billion, while imports marginally contracted by 0.84%, amounting to $54.73 billion.
In June 2024 alone, exports of Pakistani goods abroad saw a 7.3% increase to $2.529 billion compared to $2.356 billion in the corresponding period last year, marking the tenth consecutive monthly rise. Conversely, imports surged by 17.43%, totaling $4.92 billion. This resulted in a widened trade deficit for June, growing by 15.13% to $2.39 billion.
Economists attribute the overall decline in the trade deficit to sluggish economic growth and reduced activity, with the persistent gap between exports and imports continuing to strain the economy. The enduring trade deficit has also exerted pressure on the Pakistani rupee due to increased outflows of dollars.
Analysts point to reduced domestic demand, effective import management measures, and lower global commodity prices as key factors contributing to the narrowed deficit in goods trade. Despite these adjustments, challenges persist, particularly concerning high interest rates affecting export competitiveness.
The reduction in the trade deficit has also positively impacted the current account deficit (CAD), which totaled $464 million in the eleven months from July 2023 to May 2024, significantly down from $3.76 billion in the same period a year earlier.
However, recent months have seen fluctuations in the CAD, swinging to a deficit of $270 million in May 2024 from a surplus of $499 million in April 2024. High interest rates have played a crucial role in this volatility, affecting borrowing capacities and economic momentum.
Over the years, Pakistan has grappled with a persistent trade deficit, primarily driven by substantial energy imports. China has emerged as Pakistan’s largest trading partner, surpassing the United States in 2012, although recent disruptions in maritime routes have added new challenges.
The economic significance of maritime routes, crucial for over 90% of Pakistan’s trade volume, underscores the vulnerability posed by recent disruptions in the Red Sea. These disruptions have particularly affected essential supply chains, impacting sectors like large-scale manufacturing and key exports such as textiles, rice, and fruits.
As Pakistan navigates these economic challenges, stakeholders continue to monitor global trade dynamics and domestic policy measures to stabilize and enhance economic resilience in the face of global uncertainties.
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