Trade deficit shrinks by 35% in first quarter of FY20

Tahir Sherani Published October 11, 2019

Data shows imports of the country reduced by 20.6pc, while exports increased by 2.75pc during the three-month period. — Reuters/File

The country's trade deficit contracted by a significant 35 per cent in the first quarter of the financial year 2020, the Pakistan Bureau of Statistics (PBS) reported.

The PBS in its quarterly report said that the country's trade deficit stood at $5.727 billion during the quarter ending September 30 as compared to a $8.791bn deficit during the same period last year.

The decline was largely driven by a fall in imports, which reduced by 20.59pc when compared with the first quarter last year. During the period in review, exports increased by a marginal 2.75pc.

According to the PBS data, the volume of exports during the three months clocked in at $5.522bn as compared to $5.374bn exports during the same period last fiscal.

The imports, meanwhile, fell to $11.249bn in July-September 2019 in contrast with $14.165bn during the same period last year.

On a month-on-month basis, exports increased by 2.67pc during the month of September to $1.769bn from $1.723bn in the corresponding month last year. Similarly, imports dropped by 13.90pc to $3.785bn from $4.396bn in September 2018. The trade deficit thus showed a sharp decline of 24.58pc in September 2019 over the same month last year.

A comparison of numbers of September 2019 and of August 2019 shows that exports decreased by 4.99pc in September as compared to the previous month while imports rose by 1.42pc.

In September, exports stood at $1.769bn as opposed to $1.862bn in August. Imports increased to $3.785bn in September from $3.732bn in August this year. The overall trade deficit thus jumped by 7.81pc in September over the previous month.

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Tahir Sherani is an Islamabad-based reporter for Dawn News (TV) with 16 years of experience. His coverage focuses on the national economy, energy, cabinet affairs, the Establishment Division, and the Prime Minister’s Office.

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Mansur Ul Haque

Oct 11, 2019 09:03pm

Month of September shows increase in imports and decrease in exports as compared to August. Let's see trade deficit improve next month or vice versa.

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Vital

Oct 11, 2019 09:05pm

Well when there is hardly any trade and imports are prohibitively expensive, trade deficit is bound to shrink along with economy slow down. So how is this news?

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brr

Oct 11, 2019 09:08pm

Is tis good or bad? Less imports means less capex too? Are exports increase by about 3% sustainable?

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Ramesh R

Oct 11, 2019 09:10pm

In a simple word, Import & export is declining.

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Vivek Lahore

Oct 11, 2019 09:12pm

The trade deficit is nearly 2 billion dollars per month. The FM has mentioned in march that the deficit will reduce to 1 billion dollars by year end, which didn't happen

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Shaz K

Oct 11, 2019 09:21pm

Good times are on the way....a little more patience and we all will see the outcome. Good Luck IK

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Focus on the truth

Oct 11, 2019 09:24pm

Getting there and hopefully inflation will show a slow down by the end of the year.

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asharbhai

Oct 11, 2019 09:28pm

cutting down imports is easy, though good thing if local industry takes over imported stuff. However imports should grow which didn't happen, so it's kind of a non achievement. basic infrastructure is poor

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Taimoor

Oct 11, 2019 09:45pm

@Vivek Lahore, it's not year-end yet.

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Waqas

Oct 11, 2019 10:04pm

Annual reports matter, quarterly only matter in extremely vital KPIs

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Philosopher (from Japan)

Oct 11, 2019 10:09pm

If import is getting down without increase in exports it won’t effect net deficit means this will slow down large scale manufacturing n ultimately it’s share in gdp. So the cost of low ca deficit means low gdp too on the expense of low imports of machinery n materials I guess.

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Umair

Oct 11, 2019 10:10pm

Overall trade deficit decreased in 12 months. The one month comparison is not an ideal way of measuring country economics. Overall satisfactory numbers compared to 2018.

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Rafay Adeel

Oct 11, 2019 10:14pm

Imports are bound to shrink with the current taxation and tariffs. If the economy has to be stimulated, exports must grow to shrink any trade deficit. Curtailing imports isn't going to cut it. It's just going to make life difficult for the ordinary citizen.

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Moth

Oct 11, 2019 10:21pm

Laws of economics working Classical trade 101 course

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Zak

Oct 11, 2019 10:41pm

A deficit of $5 .27 billion for first quarter means approx monthly deficit of $1.9, which is not hard to equal by exports. This is where concentration should be.

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Zak

Oct 11, 2019 10:42pm

Economy heading in right direction. In 5 years time, we will be in trade surplus.

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Samir

Oct 11, 2019 10:54pm

If imports decrease, it shows economic slowdown. Export growth of nearly 3% is far from satisfactory. Our foreign exchange is only 7 bill, compare with India of 437 bill

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Uzair

Oct 11, 2019 11:06pm

Frankly, most of us wouldn't be able to make heads or tails of news like this that politicians throw around here and there (I'm pretty sure they don't have any better understanding than us either). Which is why it is important to have provide a brief assessment in layman terms by a qualified economists. There is a reason why it is a specialized field in of itself, rather than part of accounting, business etc.

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rama

Oct 11, 2019 11:07pm

this is good sign for Pakistan. but if tax collection is not increasing then govt has to cut down on social spending, which is bad. in India tax collection grew merely 13%. but Modi is expecting investment from USA, Korea and China to infuse growth.

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Liman Gashkori

Oct 11, 2019 11:24pm

People could not afford 35% of those goods.

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Anwar Pasha

Oct 11, 2019 11:38pm

This is great news! All due to efforts of Imran khan and PTI team. The increase in exports indicates how much investment IK has brought from USA, China and SA. Under IK we have become an export oriented country and soon we will be Asia No. 1 economy.

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Razk

Oct 11, 2019 11:44pm

Well playing captain. Neighbors! why don't you pay attention on your economy than ours.

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Khalid Pervez

Oct 11, 2019 11:56pm

@Vivek Lahore, not sure if you noticed or not .. but year end has not come yet .. but sure let's take a negative stance on just about everything

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Oct 12, 2019 12:05am

@Vital, increasing exports is another way to decrease the trade deficit, but it takes considerably longer for export related policies to bear fruit. Most countries in similar circumstances to those of Pakistan, trying to reduce their trade deficit, would make imports prohibitively expensive with concomitant devaluation of the currency. One should start seeing the positive effects of the latter in 12-24 months times, but these can only be sustained through reforms in the long run.

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Oct 12, 2019 12:11am

@brr, the 3% increase in monetary value means a considerably larger increase in export volume. Due to 30% or so devaluation in currency, what bought a foreign customer 10 towels last year would buy them 12 towels now (a crude example taking into account inflation). So a 3% increase means a lot more stuff has been exported compared with last year, and this makes your product more competitive in export market for the coming days. In theory you would see larger increases in coming months.

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Shariq

Oct 12, 2019 12:15am

Results of better house keeping but the real question is what is the trajectory of exports for the remaining fiscal year.

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Khan

Oct 12, 2019 12:27am

Great news coming

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Ash20

Oct 12, 2019 12:43am

It’s actually contraction of trade and economy. Once import restrictions are removed, deficit will increase as no fundamental changes has happened.

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SachiBaat

Oct 12, 2019 12:44am

Exports rose by 2.75pc, well. Okay.

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Hassan

Oct 12, 2019 12:44am

@VR, the question is what will Pakistan export. Textile is non competitive, cement exports to India stopped, fruits vegetables and foodgrains cannot sustain a country's economy. Archaic laws and severe corruption hamper tourism. What is left.

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Hassan

Oct 12, 2019 12:46am

@Anwar Pasha , get your facts cleared.

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Sana

Oct 12, 2019 01:47am

@Mansur Ul Haque, yes keep on 'let's see' story

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Sana

Oct 12, 2019 01:47am

@Vivek Lahore, You are right its because FM speaks without any info

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Sana

Oct 12, 2019 01:49am

@Uzair, you are right but where will you find 'qualified economists?"

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Sami

Oct 12, 2019 01:56am

@Ramesh R, read the news pleas before you take pleasure. It says exports have increased and imports have decreased which means we are relying on our resources instead of buying from outside and also exporting outside the country.

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Dr. Salaria, Aamir Ahmad

Oct 12, 2019 02:00am

Great news.

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salman

Oct 12, 2019 02:22am

@Ramesh R, you dont understand simple english

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HashBrown®

Oct 12, 2019 02:30am

@VR, Valid comments, thank you.

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Truth be Told

Oct 12, 2019 05:37am

So here a trade deficit might not be a bad thing looking to the export only increased by a few points. Those imports brings food to many people table. It's not a advantage if the export are not increased at similar level.

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Imtiaz Ali Khan

Oct 12, 2019 05:47am

@Shaz K, Well said. Hard work pays off no matter how much the noise is. Pakistan is very viable rich nation only good leadership was needed and now we have it.

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Rizwan

Oct 12, 2019 06:13am

Imports are falling, exports are declining. Is it a good news? Our economy is shrinking.

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deva

Oct 12, 2019 07:11am

Cut domestic expenses which dont give returns. Trade deficit should get reduced by increase in export. if it gets reduced by only stopping imports then means economy is slowing down at faster pace. Let me tell you one thing, curb is easier but to make someone by your product is tough and very slow process. meaning GDP increase is very very slow process compare to GDP decline process. All expenses should be proportionate to earnings but if you wants to brake this principal then give higher proportion to education and Health only as that will result value for country. All the best

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sixes

Oct 12, 2019 07:33am

Need of an hour is to reduce trade deficit, whether by reducing imports or by increasing exports. Though target is being achieved by not a healthy mode, it still works. More to be done to increase exports to neighboring countries Afghanistan and Iran. PTI need to do more to sign FTA with Australia and European countries.

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Syed Huzaifa Ahmed

Oct 12, 2019 08:55am

This is pathetic. Trade deficit should only be decreased by increasing exports. Decrease in imports is just temporary.

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Zillay Husnain

Oct 12, 2019 01:25pm

@Vital, production driven growth is needed instead of consumption driven growth. reducing imports never hurt in long run but also it contributes to self dependence.

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Vikas

Oct 12, 2019 02:51pm

@VR, A crude example yes. It that is the problem. Pakistan has to get out of a mindset and system of exporting at the most tauliya, chaddars. Think beyond and expand the basket of good and services. At best the addition would be marginal quantities of treated dead animal skin (leather) fruits and a few companies exporting IT services to a few Pakistani businessmen abroad.

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Vikas

Oct 12, 2019 02:54pm

@VR, Your maths also shows that how hard Pakistanis will have to work and export so much more to meet the same level of imports. That is the crux. Working harder and exporting a lot more is the only solution. Except of course the All time great game changer CPEC. If till tax collected after the tax holidays really is more than 5 billion dollars a month at today’s prices. Yeah!!

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kashif

Oct 12, 2019 04:19pm

@Vital, Exports will be on decline as well, as in meantime private sector shrinks while government sector expands due to various factors, formation of new departments, new companies, more investment in government securities due to higher interest rate, higher profit in electric companies due to high cost of it, which will eventually increase imports (as government is all about luxuries) as shown in September figure and gradually decrease export along with private sector size.

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Bangbang

Oct 12, 2019 05:58pm

So does the GDP.

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RSS

Oct 12, 2019 08:48pm

Decreasing imports are clear sign of reduced buying power of Pakistanis. The imports are not declining because Pakistanis suddenly have capacity to produce at home. Imports are declining because Pakistanis do no have money to buy. With reduced imports, govt of Pakistan would not have less taxes collected. It would mean more govt budget deficit and more reliance on foreign loans and aid to run govt. Also reduced import would mean less trade activities which in turn would cause more unemployment and poverty. All in all, Pakistan is becoming Somalia of Asia at a very fast pace.

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Shazad

Oct 12, 2019 10:06pm

Please do not be ignorant and learn economics. Decrease in import does not mean slowing down of economy. Pakistan pays dollar for imports but unfortunately, Pakistan do not print dollars. They either get dollars by export, remittances of Pak expatriates or borrowing. When Pakistan borrows, they pay interest on that borrowed dollars. A country that imports more than they earn from exports and remittances, that country eventually go bankrupt. Imran has choice (like past when crooks were in power). Imran could keep borrowing $s at high interest rate, steal some and keep financing imports OR devalue rupee, increase tariffs making import expensive and ban some imports, so Pakistan can afford imports without borrowing. That is what Imran Govt is doing. Data released is encouraging, as it shows increase in exports and decrease in imports. This trend should continue. Eventually, Pakistan would start retiring debt, saving on interest payments as well as avoiding chances of bankruptcy.

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