ISLAMABAD: Pakistan’s trade deficit fell sharply by 15 per cent in the month of December 2018 compared to November, driven largely by decline in fuel imports and machinery.

When compared to December 2017, the decline is even sharper, falling by 18.6pc, according to the official figures of the Pakistan Bureau of Statistics shared with the federal cabinet on Thursday.

Meanwhile, exports showed sluggish growth of 5.48pc compared to December 2017 despite a massive devaluation of almost 33pc since then. Exports touched $2.08 billion in December 2018 compared to $1.97bn last year.

Exports show sluggish growth, ministry claims regulatory duties have compressed imports

The half yearly exports posted a paltry growth of 2.19pc to $11.21bn from $10.97bn over the corresponding months of last year. The numbers show the government still has more ground to cover in order to fulfill its pledge to revive exports.

Trade deficit has been at the heart of the economy’s difficulties in the external sector, hitting an all-time high of $37.6bn last year, and respite on this front has been long-awaited. The government wasted no time to tout the figures.

Information Minister Fawad Chaudhry in a media briefing held immediately after the cabinet meeting said that the prime minister drew confidence from the decline in the trade deficit.

The premier told the cabinet when presented with the figures that “we are moving in the right direction,” Fawad remarked.

Federal Minister for Planning, Development and Reforms Khusro Bakhtiar said that his government is coming up with a five-year economic plan focusing on increasing exports from the country. He said the proposed policy will be focused on producing growth in the country.

In a late night press release, the finance ministry also touted the figures. The statement, which was a departure from standard practice, said that the “[g]overnment’s policy measures have resulted in shrinking of trade deficit, decline in imports and increase in exports which augurs well for overall balance of payment of the country.”

“The trade deficit that stood at $17.7bn in July-December 2017 has shrunk by 5pc to $16.8bn in the corresponding period in 2018”, the release highlighted.

In absolute terms, trade deficit dipped to $2.36bn in December 2018 from $2.78bn in November 2018. On the same pattern, it fell from $2.9bn in December 2017.

The value of imported goods in the period of July to December was recorded at $28.03bn, down 2.29pc or $658 million from the import bill in the corresponding months of last fiscal year, which was $28.69bn. The decline in imports was steeper in December 2018 which fell by 8.8pc to $4.44bn from $4.8bn over the corresponding month in 2017.

“This trend is even more pronounced in respect of imports under regulatory duty (RD) regime, where the import value has declined from $5.2bn in July-December 2017 to $4.4bn in July-December 2018, showing a contraction of 16pc (effective on 1994 tariff lines),” the statement from finance ministry claimed, adding that on a month to month comparison, the data “reflects an import compression of over 12pc.”

According to the press release, imports under the RD regime fell by 23pc during December 2018 when compared with December 2017.

“Data indicates that the import compression measures taken in the supplementary Finance Act, 2018 have firmly taken hold and are now effectively curtailing imports as per policy regime of the government,” the statement said.

Published in Dawn, January 11th, 2019