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Trade deficit swells 33pc YoY - Inside Financial Markets

Trade deficit swells 33pc YoY

– Business Recorder

The country’s trade deficit has swollen by 33 percent to $ 30.796 billion in FY 2020-21 as compared to $ 23.180 billion during 2019-20.

Imports posted a growth of 25.8 per cent to $ 56.091 billion during the fiscal year against $ 44.574 billion in the same period of 2019-20, which implies imports were higher by $ 11.517 billion during the year past. Imports stood at $ 6.052 billion in June 2021 as compared to $ 2.333 billion in corresponding month of 2020, showing an enormous growth of 62.7 per cent.

However, merchandize exports have crossed $ 25 billion in FY 2020-21 as compared to $ 21.394 in FY 2019-20, posting a growth of 18.2 per cent. Pakistan’s exports in 2013-14 stood at $ 25.121 whereas exports were $ 25.294, in FY 2020-21, or just an increase of a few million dollars, with 42 percent tariff rationalization and other fiscal incentives.

In June, 2021, exports constituted a growth of 70 per cent – $ 2.718 billion against $ 1.119 billion in June 2020. The trade deficit in June 2021 grew by 57.2 per cent. The export of services is expected to be $ 6 billion in FY 2020-21.

Addressing a press conference, Prime Minister Advisor on Commerce and Investment, Abdul Razak Dawood, flanked with Secretary Commerce, Sualeh Ahmad Faruqui, shared details of exports performance of FY 2020-21, rationalization in custom tariffs and his scheduled visit to Uzbekistan on July 15, 2021, during which both countries are scheduled to sign a transit trade agreement.

Dawood commended the role of exporters for achieving $ 25 billion mark, with a growth of 18 per cent at a time when the entire world is facing difficult situation due to Covid-19.

“This is a remarkable achievement by our exporters considering the difficulties created by Covid-19 at home and resultant contractions in our major markets. It was not an easy task as many countries went into lock down, which severely affected business,” he said, adding that not only Pakistani exporters survived the crisis but also enhanced exports in many sectors.

Dawood and Secretary Commerce brushed aside criticism on the performance of Commerce Ministry and Trade Development Authority of Pakistan (TDAP), saying both the Ministry and TDAP are playing their roles in export growth.

He said tariffs have been rationalized on more than 4,000 tariff lines in the last 18 months out of a total of 7,300 tariff lines the revenue impact of which was around Rs 40-50 billion.

In budget 2021-22, Additional Customs Duty (ACD) has been reduced from 7 per cent to 6 per cent on items currently subject to 20 per cent customs duty slab.

Razak Dawood maintained that tariff should not be increased for revenue enhancement, adding that three or four years are required to complete tariff rationalization process. He said import of 42 per cent raw material is now duty fee.

He said, textile exports have posted a growth of 18.85 per cent during FY 2020-21, whereas 27 percent growth in exports was recorded in pharmaceuticals. However, export of rice has shown a negative growth of 8 per cent, followed by cotton yarn 2 per cent, leather 16 per cent and plastic 6 per cent.

In reply to a question, Mr. Dawood said that Pakistan wants to sign a new Afghanistan-Pakistan Transit Trade Agreement (APTTA) and Preferential Trade Agreement (PTA).

Answering another question he said that the government is in touch with the European Union (EU) with respect to implementation status of 27 Conventions.

“There is no major issue with the EU as Pakistan has already implemented 22 Conventions out of 27,” he maintained.

Replying to a question regarding relations with India, Commerce Advisor said that Prime Minister has already announced government’s policy towards India, which will be remain in place

Syed Zaki Hussain

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)