By Asad Cheema
ISLAMABAD: Pakistan Businesses Forum (PBF) on Thursday said the return of world to normal life from the widespread lockdown and the
gradual reopening of businesses around the globe positively impacted Pakistan’s balance of trade. Pakistan saved $8.6 billion as trade loss shrank 27% in the fiscal year that ended June 30th. President PBF Sahibzada Mian Usman Zulfiqar said Pakistan relies heavily on energy imports. It meets over 70% of domestic demand through imports. The share of energy, however, fell to one-fifth of total imports in recent months following the oil price crash.
Besides, the recent petroleum product crisis in Pakistan suggested that at least three oil marketing companies (OMCs) did not import oil, meaning imports remained low in terms of volumes as well in May, he added. The President PBF however, expressed concern over a significant drop in imports as around 60% of imports were made by the export sector. He said, “The improvement in exports came after the country’s textile sector received new orders, including from the global health sector in the wake of Covid-19 pandemic”.
Similarly, imports fell to their lowest level in nine years after Pakistan raised duties and adopted measures to curb spending. It reduced the current account deficit – the loss of foreign exchange as recorded in the country’s dollar account with the rest of the world – by more than 73% in the first nine months of the year, he maintained. However, Mian Usman Zulfiqar said that it wasn’t enough to change our import-to-export ratio. Pakistan still spends more than two dollars for every dollar earned. It was the same last year.
In the latest fiscal year, Pakistan exported goods worth $21.3 billion compared to imports of $44.6 billion, leaving it with a deficit of $23 billion, he said. The President PBF said that trade deficit means we are paying more on goods and services we are buying from the world than what we are earning by selling our products and services to them. The latest data shows a drop of $10 billion in our annual imports but global demand suppression triggered by the coronavirus pandemic in the last quarter pushed exports down by 6.84% or $1.5 billion, compared to fiscal year 2019.
He said that the balance of trade or the difference between our imports and exports is a significant part of our current account. A large trade deficit tends to expand the current account deficit, which is an important gauge to measure an economy’s health.
