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Trade deficit recedes by 30pc in July-Nov as imports dip

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  • Imports drop by 20.15% in July-November.
  • 33.6% imports dip in November 2022.
  • Services trade deficit receded by 38%.

ISLAMABAD: The country’s trade deficit in the first five months of ongoing fiscal year 2022-23 fell by 30.14% to $14.4 billion due to a drop in non-essential imports, The News reported Friday. 

According to the monthly trade bulletin of the Pakistan Bureau of Statistics (PBS), the imports in July-November dropped by 20.15% to $26.34 billion from $32.98 billion in the same period last year.

However, exports were also reduced by 3.5% in the same period to $11.93 billion against $12.36 billion in the same period last year, the PBS said Thursday.

Compared to November 2021, Pakistan imported 33.6% fewer goods and sold 18.3% fewer products abroad in November 2022. In November 2022, exports dropped by 18.34% to $2.37 billion from $2.9 billion in the same month in 2021, while imports dropped 33.6% to $5.245 billion from $7.9 billion in November 2021.

The trade deficit was narrowed by 42.46% to $2.88 billion from $4.99 billion in the same month last year.

A downward trend has been witnessed in the import bill since the beginning of the current fiscal year as imports fell by 10.4% in July, 7.7% in August, 19.7% in September, 27.2% in October and 33.6% in November over their respective corresponding months of 2021, PBS trade bulletin revealed.

Comparing monthly trade performance with the previous month (October), goods exports in November 2022 fell 0.63% from $2.38 billion last month, while imports increased 11.34% compared to October’s $4.7 billion.

Experts predict the export bill might not touch the $29 billion threshold in 2022-23. The average monthly exports in the first five months of the fiscal year are $2.386 billion. The export growth has been affected by local constraints and the slowdown of world economies. Economic policies such as costly bank financing, rupee devaluation, and expensive input costs alongside political instability have played a significant role in the export drop.

It is pertinent to mention that in the last fiscal 2021-22, the economy accumulated a record-high trade deficit of $48.38 billion, registering over a 31% upsurge over the fiscal year 2020-21.

Trade in Services

The PBS also issued economic performance data on trade in services with other countries. The services trade deficit receded by 38% to $812 million against $1.31 billion a year ago in the first four months of the fiscal year. From July to October, services exports increased by 3.97% to $2.26 billion, and imports dropped by 11.8% to $3.1 billion.

Services exports in October 2022 increased by 1.14% to $559 million, while imports dropped by 26% to $730 million against exports of $553 million and imports of $986 million in October 2021. Yearly, the services trade deficit lowered by 60.55% to $171 million in October 2022 against $433 million in October 2021.

PBS data shows that the services exports declined by 2.1% and imports by 1% over the previous month. In September 2022, Pakistan earned $571 million by selling its services abroad, while local businesses hired services worth $737 million from overseas service providers, registering a $166 million deficit.

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Moody’s says the IMF programme will increase Pakistan’s foreign financing.

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Moody’s, a reputable international rating agency, has stated that Pakistan’s chances of acquiring funding will increase as a result of the recent agreement with the International Monetary Fund (IMF), which offers dependable sources for that purpose from both friendly countries and international financial institutions.

According to a recent Moody’s analysis on Pakistan’s economy, social unrest and tensions could result from Pakistan’s ongoing inflation. The country’s economic reforms may be hampered by increased taxes and potential changes to the energy tariff, it continued.

Moody’s, on the other hand, agrees that the coalition government headed by Shehbaz Sharif of the PML-N is in danger of failing to secure an election mandate, which may potentially undermine the successful and long-lasting execution of economic reforms.

The government’s capacity to proceed with economic changes may be hampered by societal unrest and poor governance, according to Moody’s.

In order to appease the IMF by fulfilling a prerequisite for authorising a rescue package, the government raised the basic tariff on electricity, which coincided with the most recent increase in fuel prices announced on Monday. This report was released by Moody’s.

Food costs have increased in the nation, where the vast majority is experiencing an unprecedented crisis due to the high cost of living, following the government’s earlier presentation of a budget that included a large increase in income tax for the salaried classes and the implementation of GST on commodities like milk.

The most recent comments were made following Islamabad’s achievement of a staff-level agreement for a $7 billion contract that spans 37 months and is contingent upon final approval by the IMF Executive Board.

It states that Pakistan will need foreign financing totaling about $21 billion in 2024–2025 and $23 billion in 2025–2026, meaning that the country’s present $9.4 billion in reserves won’t be sufficient to cover its needs.

Therefore, according to Moody’s, Pakistan is in an alarming position with regard to its external debt, and the next three to five years will be extremely difficult for the formulation and implementation of policies.

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Base Of bilateral relations: China And Pakistan Reiterate Their Support For CPEC

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China-Pakistan economic corridor is a major project of the Belt and Road Initiative, and both countries have reiterated their commitment to it. It remains a fundamental aspect of their bilateral relations.

Vice Chairman Zhao Chenxin of the National Development and Reform Commission of China and Minister Ahsan Iqbal of Planning and Development met in Beijing, where Ahsan Iqbal made this assurance.

The summit made clear how committed China and Pakistan are to advancing their strategic cooperative partnership in all weather conditions.

The focus of the discussion was on how the CPEC was going, with both parties reviewing project development and discussing how the agreement made at the leadership level will lead to the launch of an enhanced version of the CPEC.

In order to improve trade, connectivity, and socioeconomic growth in the area, they emphasised the need of CPEC projects.

The Ml-I Project, the KKH realignment, and the Sukkur-Hyderabad motorway—the last remaining segment of the Karachi-Peshawar motorway network—were all to be expedited.

Expanding the partnership’s horizons to include technology, innovation, education, connectivity, and renewable energy sources was another topic of discussion.

Specifically in the special economic zones being built under the Comprehensive Economic Cooperation (CPEX), Vice Chairman NDRC emphasised the possibility of China investing more in Pakistan.

In addition to expressing confidence in the ongoing success of the two nations’ collaboration, Zhao Chenxin reiterated China’s support for Pakistan’s development aspirations.

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Pakistani government raises petrol prices

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A recent announcement states that the price of petrol has increased by Rs 9.99 per litre, to Rs 275.60 per litre.

The cost of high-speed diesel has also increased significantly, rising by Rs 6.18 a litre. Diesel is now priced at Rs 283.63 a litre.

Furthermore, kerosene now costs Rs 0.83 more per gallon.

The cost of products and services is predicted to rise in response to the increase in petroleum prices, further taxing household budgets and jeopardizing the stability of the economy.

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