Pakistan trade deficit widened for the second consecutive month

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Pakistan trade deficit widened for the second consecutive month

Pakistan’s trade deficit widened by 21.03 percent to $2.601 billion in January 2021 from $2.149 billion compared with the same month last year, according to the data released by the Pakistan Bureau of Statistics.

This sharp worsening is mainly due to surging duty-free imports. This is the second consecutive month when the trade deficit has swelled, which hints at recovering the consumption economy.

An increase in export also means a recovering global economy and improvement in domestic production. ------------------------------

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During the first seven months of the fiscal year 2021 (FY210), i.e., July 2020 to January 2021, the trade deficit increased by 8.27 percent to $14.96 billion from $13.82 billion in the corresponding period last year.

In December 2020, Pakistan’s trade deficit had widened by 32.04 percent to $2.683 billion as compared to $2.032 billion in December 2019.

The country’s imports have been rising since September 2020. The duty-free import value was recorded an unprecedented growth of 80 percent in December while it grew by 30 percent in January.

In the July-January period of 2020-21, the duty-free imports witnessed an increase of 27 percent in terms of dollars compared to the previous year, while the share of duty-free imports also surged 42 percent in overall imports in the seven months in concern. This is up from 35 percent over the same period last year.

As a result of this increase in January, the import bill also went up by 14.85 percent year-on-year to $4.73 billion against $4.121 billion over the corresponding month last year.

Last year, the cost of imports had witnessed a steep decline of $10.29 billion, or 18.78 percent, to $44.509 billion, compared to $54.799 billion in the year before.