Islamabad [Pakistan], June 3 (ANI): Pakistan’s merchandise trade deficit in May swelled 134% from a year earlier due to weaker export earnings and higher than expected imports, data shows from the Ministry of Commerce on Wednesday.
According to Dawn, the monthly deficit reached 3.432 billion dollars in May 2021 against 1.467 billion dollars in 2020, raising fears of creating a problem for the government in the control of the external accounts. In terms of rupees, the trade deficit stood at 125.2% year-on-year.
Since December 2020, Pakistan’s trade gap has widened, mainly due to exponential growth in imports with relatively slow growth in the country’s export earnings.
Between July 2020 and May 2021, the trade gap widened by 29.5% to reach USD 27.275 billion in the 11 months of 2020-2021, compared to USD 21.065 billion in the corresponding previous year.
While in FY20, the country’s trade deficit had narrowed to US $ 23.099 billion from US $ 31.820 billion, this target has already been surpassed in the 10 months of FY21, indicating serious pressure on the outer side due to increased imports.
Last month, duty-free imports grew 73.78 percent and dutiable imports increased 94.84 percent year-on-year. The increase in dutiable imports is due to an increase in regular imports of smuggled items such as tires, textiles and tea, Dawn reported.
However, the rebound in imports is likely to create pressure from the external side. It is believed that the current account deficit in FY21 will remain in the $ 4 billion to $ 6 billion range by the end of June.
In addition, exports to Pakistan fell 25.3 percent on a monthly basis. The month-over-month decline is mainly due to a substantial drop in export earnings in May despite a weaker base in May 2020 which provided a weaker base for higher growth.
The value-added sector has already warned the government of a possible shortage of raw materials in the coming months. Stakeholders have warned the government that if cotton yarn is not available in the required quantity, pending export orders will eventually be diverted to rival countries, Dawn reported. (ANI)