Trade Deficit Recovery Through Exports
Trade Deficit Recovery Through Exports: Trade deficit has increased upto 14 % amounting to $30.245 billion during the first 10 months of the current fiscal year of 2017-18. However the government is optimistic that recovery in exports would ease pressure on external sector.
Trade deficit amounted to $26.436 billion in the July-April period of the last fiscal year.
Recovery Through Exports
Secretary Commerce Younus Dagha has claimed that exports recovery would ease pressure on trade balance. With CPEC (China-Pakistan Economic Corridor) machinery coming in, the increased exports (19%t in April and 14% overall) are good omen for the external sector.
The increase of $2.3 billion in exports is expected to be $2.7 billion which will reduce the need for foreign financing. In April, trade deficit shrank 6% to $2.977 billion over the same month of the last fiscal year, demonstrating that the pace of increasing trade deficit slowed down.
In April, exports, however, were down four% from $2.231 billion in March. Imports also dropped three percent in April from $5.280 billion in the previous month. Trade deficit in April decreased 2% in April from $3.049 billion.
Government And State Bank of Pakistan
The policy intervention of government and State Bank of Pakistan in terms of rupee devaluation and tariff and non-tariff barriers have started yielding positive results as exports are picking up and imports slowing down.
Rise of Current Account Deficit
Widening gap in exports and imports is affecting the current account balance. Current account deficit has risen to $12.029 billion in the first nine months of FY2018, up staggering 51 percent year-over-year. Current account deficit increased to an eight-year high of 5% of the GDP in the July-March period.
Measures Required To Stabilize Foreign Currency Reserves
Economists expected current account deficit to reach $16 to $17 billion in the outgoing fiscal year. They advised the government to take measures to avoid depletion of foreign currency reserves any further.
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