KARACHI, March 21: Pakistan recorded a large external account deficit of $1.2 billion in the first half of this fiscal year i.e. during July-December 2004, according to the State Bank’s second quarterly report released here on Monday. “This is in sharp contrast to the surplus of around $1 billion in the corresponding period of the previous year.”

In net terms, practically all of the deterioration emerges from a large $2.1 billion jump in the country’s trade deficit from a mere $159 million in the first half of FY04 to $2.257 billion in the first half of this fiscal year.

The widening of the trade gap, in turn, “was caused by a massive 47.7 per cent year-on-year jump in imports during H1-FY05 principally due to a big rise in the oil bill and machinery imports.”

The impact of the surge in imports was compounded by the weakness in Q2-FY05 textile exports, which held down exports growth to a relatively modest 14.6 per cent during the first half of the current fiscal year. The large import-led trade gap and its impact on the rise in shipping charges accounted for a significant part of the $884 million current account deficit in H1-FY05.