Trade deficit projected to be 6pc lower

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KARACHI: Market analysts expect the country’s trade deficit to narrow down by six percent to $15 billion in the current fiscal year.


According to the data released by Pakistan Bureau of Statistics (PBS), the country’s trade deficit decreased by 6.75 percent in the first ten months of the current fiscal year. Meanwhile, the country’s imports declined by $377 million or one percent, thereby reducing the overall trade deficit.


“We attribute the decline in imports to falling oil prices, where the international oil (Arab Light) declined by three percent on year-on-year basis in the first ten months of the current fiscal year. Increased exports have in turn emanated from flourishing textile exports, mainly to China and Hong Kong, where yarn and cloth have been the majorly exported items,” Muniba Ahmed at Investcap Securities, said.


While the deficit in balance of trade declined in the first ten months of the current fiscal year, adding an additional $1.195 billion to the current account against last year, remittances are expected to provide further support, having posted a growth of 6.37 percent on year-on-year basis, reaching $11.5 billion in the period under review, she added.


“Although, a narrowing trade deficit and rising remittances provide a breather to the current account balance, huge outflows in the form of interest payments are a major concern for the current account,” Muniba said.


In addition, declining foreign direct investment is also a cause for concern, she added. Khurram Schehzad at Arif Habib Limited said that the overall trade deficit for the current fiscal year is likely to be low as compared to last year.

Courtesy:  The News

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