By Mushtaq Ghumman
The country’s trade deficit has widened by 68.6 percent as imports reached $32.851 billion during the first five months (July-November) of fiscal year 2021-22 as compared to $19.448 billion in the corresponding period of 2020-21, posting a gap of $13.403 billion.
According to the foreign trade data, imports had constituted a growth of just 1.63 percent to $ 19.487 billion in July- November, 2020-21 as compared to $19.175 billion during the same period of 2019-20.
Though Commerce Ministry has claimed that neither international price of commodities were in its control nor import of items like petroleum products, LNG, wheat, sugar and Covid-19 vaccine was as per the Ministry’s choice, Prime Minister who is also Minister in-charge of Commerce Division, recently acknowledged that lesser growth in exports is the main cause of the current account deficit.
Prime Minister has also appointed Senator Aon Abbas Buppi as SAPM on E-Commerce, who is expected to succeed Abdul Razak Dawood in the months to come as Advisor.
In November 2021, imports were recorded at $7.750 billion against $4.311 billion in November 2020, showing a growth of 80 percent or $4.847 billion.
According to Commerce Advisor, Pakistan’s exports during November 2021 increased by 33 percent to a historic monthly high of $2.903 billion as compared to $2.174 billion during the corresponding period of last year. He said Commerce Ministry’s target was $2.6 billion.
However, trade deficit in November 2021 has ballooned by over 263 percent to $4.4847 billion in November 2021 as compared to $2.137 billion in the corresponding month of last year.
Dawood further claimed that exports posted a growth of 27 percent to $12.365 billion during Jul-November 2021-22, as compared to $9.747 billion during the same period of 2020-21.
Sources said Commerce Ministry has completed analysis of import figures of each commodity during the first four months of the fiscal year, along with reasons for their growth. Increase in raw material and intermediaries are good for country’s exports and growth in import of these commodities is as per threshold.
The sources said the threshold was crossed in energy related imports, wheat, sugar and vaccines.
However, Planning Commission, in its quarterly report of first quarter of FY 2021-22 said that on shipment basis, exports have increased by $1.5 billion or 27.9 percent due to favourable terms of trade.
However, due to steep fall in quantity exported of two major items - cotton cloth (75.3%) and synthetic textiles (63.7%) - export value was down by $1.6 billion, which explains significant portion of increase in trade deficit.
The growth of value-added exports in FY21 (37 percent growth in knitwear, 32 percent in towel, 29 percent in bed wear, 19 percent in garments) is on the back of enhanced cotton yarn supply to the domestic textile industry.
With some positive quantum impact, net quantum drag worked out at $1.6 billion and the global price surge has contributed in positive direction to the extent of $3 billion.
This article was first published in Business Recorder on Dec 2, 2021.