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Exports grow but imports rise faster to widen trade deficit

13
Oct '08
Pakistan is facing a very severe fiscal squeeze and trade deficit is widening with each passing month. According to latest official data released by the Federal Bureau of Statistics reveal that, Pakistan has recorded a trade deficit of US $5.54 billion in the first quarter (July-Sept) of fiscal 2008-09.

While on one hand the country posted a healthy growth rate of 19.19 percent by exporting $5.26 billion worth of goods in the first quarter of 2008-09 in comparison to $4.42 of the same quarter of the last fiscal.

Imports on the other hand grew by 34.29 percent in rising from $10.818 billion as compared with $8.056 billion in the period under preview. For September alone, trade deficit grew by 62.13 percent amounting to $2.02 billion in comparison to $1.25 billion in the same month of last fiscal year.

The government has targeted a growth rate of 16 percent in exports and is expected to touch $21.1 billion, while imports are projected to reach $37.19 billion. The government had expected to curtail growth rate in imports to just 6.5 percent, but actual import rate is nearly five times that figure.

Experts say that it will be an uphill task in reaching the targeted export figures, looking at the economic turmoil affecting the western countries which is expected to last for quite a long time.

To add to the woes of the exporters and the government, Pakistani currency has also sharply depreciated against US dollar and other currencies in recent months, which makes Pakistan manufactured products costlier in international markets but makes imports cheaper which in turn will encourage more imports.

The government is yet to implement the Research and Development fund support it had promised to the textile industry a few months back. Other issues like LC margin imposed by the central bank of the country on exporters, increase in prices of utilities like electricity and gas continue to trouble the textile sector which by far is the largest contributor to the exports basket from the country.

Experts suggest that the government should act immediately and find lasting solutions to the problems affecting the textile sector other wise it will be faced with an ever-widening trade deficit.

Fibre2fashion News Desk - India


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