Trade deficit surges 33% to $9.4b in Q1 | The Express Tribune
Key Takeaways
- Pakistan's trade deficit widened by 33% to $9.4 billion in the first quarter of the fiscal year (July-September).
- Exports fell by 3.8% to $7.6 billion, while imports increased by 13.5% to $17 billion during the same period.
- Economic initiatives like the Uraan Pakistan programme and Dercon's plan have failed to boost lagging export performance.
- The $2.3 billion increase in the deficit exceeds the expected $2 billion IMF loan tranche, jeopardizing external stability.
- The widening deficit puts pressure on the government's fiscal year current account projections and trade liberalization strategy.
Pakistan's external sector stability is severely threatened as the trade deficit expanded by one-third, reaching $9.4 billion in the first quarter of the current fiscal year (July-September). This imbalance is driven by a significant drop in exports to $7.6 billion, a 3.8% year-on-year decline, juxtaposed with a 13.5% surge in imports reaching $17 billion. Neither the Planning Minister's Uraan Pakistan program nor Stefan Dercon's economic plan has managed to stimulate export growth, leading analysts to suspect exchange rate rigidity or exporters holding proceeds abroad. The additional $2.3 billion deficit in just three months surpasses the $2 billion IMF loan tranche the government anticipates receiving. If current trends persist, the government's fiscal year projections for the current account deficit will likely be undermined, potentially forcing a rollback of the trade liberalization policies implemented under the IMF program. Policymakers are concerned as September marked the second consecutive month of falling exports and the third consecutive month imports exceeded the $5 billion threshold.
