Pakistan trade deficit widens raising alarm bells for economy

Pakistan trade deficit widens raising alarm bells for economy
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ISLAMABAD: Despite the government claims of rising economy the trade deficit of Pakistan depicts some other picture.

Pakistan’s trade deficit in merchandise rose nearly 29 per cent year-on-year to $17.428 billion in the first seven months of the current fiscal year because of falling exports and increase in imports.

The deficit stood at $2.957bn in January, a rise of 75pc compared to $1.688bn a year ago, the Pakistan Bureau of Statistics said on Thursday.

The drop in export proceeds, along with fall in remittances , has contributed to the rising current account deficit this fiscal year.

In July-January, the overall import bill rose 13.7pc year-on-year to $29.113bn. In January alone, it increased 37.1pc to $4.737bn. Machinery imports are on the rise because of increase in infrastructure investment, especially construction of roads.

Export proceeds during the seven-month period fell 3.2pc to $11.685bn. In January, however, export proceeds grew 0.74pc, mainly because of increase in exports of textile and clothing. The marginal increase shows that exports of the garments sector, along with other value-added sectors, to Europe have started picking up under the GSP+ preferential tariff scheme.

Under a three-year strategic trade policy unveiled last year, the government set an annual exports target of $35bn by 2018. However, the policy, announced in April 2016, has yet to be implemented.

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