• Service exports rise 2.8pc to $7.8bn, IT sector leads charge
• Imports jump 17pc to $10.12bn, driven by higher transport costs
ISLAMABAD: The trade deficit in services widened by 122 per cent to $2.31 billion during the previous fiscal year from $1.04bn a year ago, according to data released by the Pakistan Bureau of Statistics on Friday.
In June, the trade deficit in services surged by 168pc to $414.99m, up from $154.7m in the same month a year ago. Data showed that the country’s export of services recorded a modest growth of 2.77pc, reaching $7.8bn in FY24, up from $7.59bn in the previous year.
This positive trend started in February and was largely driven by a surge in information technology exports.
In rupee terms, the exports saw a significant improvement of 17.22pc, amounting to Rs2.208 trillion in FY24 compared to Rs1.88tr in FY23. In 2022-23, the export of services stood at $7.3bn, an increase from $7.1bn the year before, reflecting a growth of 2.8pc.
In June 2024, service exports grew by 8.2pc to $640.02 million, up from $591.33m in the same month last year. However, on a month-on-month basis, services exports posted a decline of 8pc.
In rupee terms, June saw a 5.2pc growth in service exports, reaching Rs178.2bn compared to Rs169.47bn in June of the previous year.
According to the State Bank’s data, IT exports reached $3.2bn in FY24, up 24pc from $2.59bn in FY23. In June 2024 alone, IT exports amounted to $298m, marking a 33pc year-on-year growth.
Several factors contributed to the increase in IT exports in FY24. Pakistani IT companies made significant strides in Gulf Cooperation Council (GCC) countries, particularly Saudi Arabia, where demand for IT services has been rising.
Besides, the SBP increased the allowable retention limit in Exporters’ Specialised Foreign Currency Accounts from 35pc to 50pc, encouraging IT exporters to repatriate larger profits to Pakistan. Furthermore, a stable exchange rate provided a strong incentive for IT companies to engage in business activities and bring earnings back home.
Service imports also jumped 41.4pc in June, totalling $1.06bn, up from $746m in the same month last year. Over the fiscal year, service imports rose by 17.1pc to $10.12bn from $8.638bn in the previous year.
This increase was mainly driven by higher costs in transport and travel services, with transport payments rising due to increased air passenger fares and sea freight costs reflecting higher shipping rates and insurance premiums following the Red Sea attacks.
Published in Dawn, August 3rd, 2024
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