Pak Businesses Worry Over Rising Trade Deficit

Businessmen in Pakistan have expressed concern over the alarming rise in the trade deficit of the country, which has widened by 14% to $30.245 billion during the first 10 months of the current fiscal year of 2017-18.

They said that only recovery in exports would ease pressure on external sector, as trade deficit amounted to $26.44 billion in the July-April period, APP reported.

All Pakistan Business Forum President Ibrahim Qureshi said that the widening gap in exports and imports is affecting the current account balance. Current account deficit has risen to $12.03 billion in the first nine months of FY2018, up staggering 51% year-over-year.

Current account deficit swelled to an eight-year high of 5% of the GDP in the July-March period. He said that the policy intervention of government and State Bank of Pakistan in terms of rupee devaluation and tariff and non-tariff barriers have started yielding some positive results as exports are picking up and imports are slowing down.

He said that Pakistan faces the unprecedented trade deficit despite the prevalence of low international prices of its biggest import, oil. A number of reasons can be attributed to the increasing trade deficit, which includes structural factors and erroneous policies.

Unlike the Middle East or East Asia, Pakistan has followed a traditional policy of import substitution rather than export promotion. Therefore, little emphasis has been given on broadening exports that have remained over-reliant on textiles. Exports of cloth, cotton yarn and value-added textiles make up almost 60% of the total exports.

Meanwhile, Rice Exporters Association of Pakistan chairman Samee Ullah Naeem said that the economic charts of Pakistan are at an unsatisfactory level. “I urge the government and policymakers to encourage private sectors to play their role in putting the economy back on track,” he added.

Samee said that the government should contain the deficit within manageable limits. With the China-Pakistan Economic Corridor machinery coming in, the increased exports are a good omen for the external sector.