For the first time in history, Pakistan’s trade deficit has widened to $30 billion with one month still remaining before the close of ongoing fiscal year as the government could not find a solution to the burgeoning imports and a constant contraction in exports.
The gap between imports and exports stood at $29.99 billion from July to May in fiscal year 2016-17, which was 42.1% or $8.9 billion more than the comparative period of previous year, Pakistan Bureau of Statistics (PBS) announced on Monday.
For the third straight month, the trade deficit breached the previous highest record and reached $30 billion.
Imports remained at high levels and were valued at $5 billion for the third consecutive month – the sole reason behind the uncontrollable trade deficit. The 11-month trade gap was $9.5-billion higher than the annual target of $20.5 billion, which was set by the Ministry of Finance at the beginning of FY17.
The fresh statistics have deepened concerns about long-term sustainability of the external sector, which the government is maintaining by borrowing from foreign countries and commercial banks.
Cheap imports have started hurting the import-substitution industries, according to experts. A strong rupee against the US dollar has made the imports cheaper.
Pakistan’s economy expected to grow by 5.5% next year: World Bank
Growth in the South Asia region is forecast to pick up to 6.8 percent in 2017 and accelerate to 7.1 percent in 2018, as part of a surge in domestic demand and exports.
The report said that regional growth is projected to remain strong. Growth is also expected to firm in 2018-19, reaching an average of 7.2%. These figures were mentioned as part of the World Bank’s report on ‘June 2017 Global Economic Prospects.’
The World Bank reports that economic growth worldwide is expected to strengthen to 2.7% in 2017 due to rise in manufacturing and trade, rising market confidence, and stabilizing commodity prices. These will also allow growth to resume in commodity-exporting emerging markets and developing economies.
According to the World Bank’s June 2017 Global Economic Prospects, in advanced economies, the growth is expected to accelerate to 1.9% in 2017, which will also benefit the trading partners of these countries. Global financing conditions remain favorable and commodity prices have stabilized. Against this improving international backdrop, growth in emerging market and developing economies as a whole will pick up to 4.1 percent this year from 3.5 percent in 2016.