ISLAMABAD, Aug 15: Pakistan’s trade deficit witnessed a modest decline of 2.59 per cent to $1.088 billion during the first month of the current fiscal year as against $1.117 billion over the same month of last year.

This showed that with a stronger base of monthly import bill last year, the starting month of July 2007 has recorded a very nominal increase in imports and exports grew at slightly higher rate during the month under review.

This trend, which is believed to be a sign of relief for economic managers, has resulted into bringing down the unexpected increase in trade deficit recorded during the last two years. Normally, the trade deficit remained within the range of $2 billion to $4 billion for the last three decades.

Under the trade policy 2007-08, the government for the first time had not projected any estimates for import bill for the year 2007-08 with an assumption that imports could not be estimated. The trade deficit recorded in the year 2006-07 was more than Rs13 billion as against the projected trade deficit of $9.4 billion for the same year.

Official figures released here by Federal Bureau of Statistics (FBS) here on Wednesday showed that the export proceeds stood at $1.485 billion in July as against $1.342 billion over the same month of the last year, indicating a growth of 10.73 per cent.

This is an unexpected growth in exports as the average growth in export was around 3 per

cent during the whole year of 2006-07. The government has projected a target of $19.2

billion for the year 2007-08.

Analysts said that the government had already missed two consecutive years’ exports targets mainly because of dismal performance of the textile sector and decline in export of traditional products.

Another major setback is the steady decline in the production of large scale manufacturing sector and heavy reliance on few industries.

This year target would again depend on performance of textile sector as government has again announced a hefty package of subsidies and financial assistance for the sector with a hope to record a double digit growth as against the six per cent growth last year.

Imports climbed by 4.67 per cent to $2.574 billion in July 2007 as against $2.459 billion over the corresponding month of last year. The import bill was dominated by high oil prices that hit the economies of developing countries like Pakistan.