Pakistan’s trade deficit contracted by 32.65 percent—from $25.44 billion in the first half of the last fiscal year—to $17.13 billion in the corresponding period of this fiscal, owing largely to a reduction in the imports of non-essentials.
According to data issued by the Pakistan Bureau of Statistics (PBS) on Tuesday, Islamabad imported $40.56 billion in goods during July-December 2021, compared to $31.38 billion during the same period of 2022. However, exports also declined, going from $15.12 billion last fiscal to $14.25 billion this year, reflecting a change of 5.79 percent. This number becomes starker when comparing December 2021 to December 2022.
The PBS data shows that Pakistan exported $2.3 billion in goods during December 2022 against $2.76 billion during the same month in 2021, a drop of 16.64 percent—though there was a 5.96 percent increase in rupee terms due to the PKR’s depreciation against the USD. By contrast, Pakistan imported $5.16 billion in goods during December 2022 against $7.58 billion during December 2021, a decline of 31.91 percent. Overall, the trade deficit reduced by 40.68 percent when comparing December 2021 ($4.82 billion) to December 2022 ($2.86 billion).
Comparing monthly trade performance, the exports of goods declined by 3.64 percent from November 2022 ($2.39 billion) to December ($2.3 billion), while imports declined 0.4 percent from November’s imports of $5.18 billion to $5.16 billion.
The decline in imports is largely attributed to the government banning the import of all non-essential luxury goods in May in a bid to stabilize the economy by curtailing the spiraling current account deficit and conserving foreign exchange reserves. However, this step has been gradually rolled back, with the State Bank of Pakistan announcing that imports benefiting export-oriented industries can resume from Jan. 2.
Currently, Pakistan has foreign reserves of just $5.82 billion—barely enough to cover a month’s of imports, especially as the bill is expected to rise once more in the coming months.