ISLAMABAD, Oct 9: Pakistan’s trade deficit widened to $3.601 billion in the first quarter (July-September) of fiscal year 2007-08, up by 13.53 per cent from $3.172 billion over the corresponding period of last year.
In September, the trade deficit worsened as it grew by 20.65 per cent over September 2006 as exports dipped and imports grew at a much higher rate, according to official figures released here on Tuesday by the Federal Bureau of Statistics (FBS).
Export of goods went up marginally at a rate of 4.77 per cent to fetch a total of $4.456 billion during the three months of the current fiscal year as against $4.253 billion over the same period of last year.
The government has set an export target of $19.2 billion for the current year 2007-08.
Imports climbed by 8.51 per cent to $8.058 billion during the July-Sept period of the current fiscal year as against $7.425 billion over the same period last year.
This high import growth has pushed up trade deficit further. However, the government has not projected any target for import proceeds of the current fiscal year.
When contacted, commerce minister Humayun Akhtar Khan told Dawn that despite challenges, the positive trend in export growth continued in the month of September 2007.
He said a growth of over five per cent was recorded in export proceeds in September after a negative trend in August.
The commerce ministry had launched a campaign of trade diplomacy for getting preferential market access for Pakistani products four years ago. This legacy created huge market access for both agriculture and industrial goods in South Asia, China, North America etc.
However, this opportunity of market access will not be achieved as industrial production was steadily on the decline for the last three years, leaving no surpluses for exports.
Similarly, there was also a sharp reduction in production of rice, and some fruits due to which overall agriculture exports this year will decline.
The textile industry, is the prime focus of the present government, but it showed no tangible results during the last three years.
“I am hopeful that the trend in export growth will continue to improve further in the up coming months. We will achieve the export target set for the current fiscal year,” the commerce minister claimed.
Asked about the yawning trade deficit, the minister replied that it was the result of the overall economic policies of the government.
“I set only export target, not import projection,” the minister replied.
The International Monetary Fund (IMF) at the conclusion of annual article IV consultation with Pakistan authorities had also advised it to make a balance in its economic policies for controlling external balance.
The economic wizards of the present government focus on increasing revenue and reducing debt-to-GDP ratio rather to give equal weightage to all other economic indicators.
Analyst said highest inflation, capital cost and energy prices during the last few years rendered Pakistani products less attractive for buyers in international market.
This can be one of the reasons for dwindling exports during the period under review.
They said the huge trade deficit also put an immense pressure on current account deficit, which was financed by selling local units through privatisation, foreign direct investment and remittances sent by overseas Pakistanis.
They have been identifying weakness in the policy and urging the government to improve the trade balance, which could eat up the hard-earned foreign exchange reserves of the country.
The government has been relying on financing trade deficit instead of making strategy to bridge the gap.