Trade deficit up by 8 pc in June 2019

Karachi, July 24, 2019: The country’s trade deficit declined by 11 percent YoY to US$28.2 billion in last fiscal year (FY19) from US$31.8 billion in the previous year.

Although in a normal scenario, this would be interpreted positively, as highlighted earlier, the previous year’s trade deficit had reached unsustainable levels and there was only one direction in which this particular indicator could have headed.

During the month of Jun-2019, the trade deficit expanded 8 percent MoM to US$22 billion, mainly on account of a 22 percent MoM reduction in exports, completely the 8 percent MoM contraction in imports.

The decline in exports was primarily due to 17 percent MoM plunge in the textile group, followed by 20 percent MoM and 22 percent MoM shrinkage in food and other manufacture categories.

Within imports, there were double-digit declines in all sub-categories (barring Petroleum and Transport). It should also be noted that there was a 22 percent MoM surge in the non-oil non-machinery (NONM) trade balance, which was largely attributable to the declining exports during the month.

Once again, although there was a decline in imports, we believe that it could have been much steeper and more needs to be done to reduce imports and improve the external account.