PTBP Web Desk
Pakistan’s trade deficit widened to $5.4 billion during the first quarter of the fiscal year 2024-25 (3MFY25), according to data released by the Pakistan Bureau of Statistics (PBS) on Wednesday.
The trade balance, which represents the gap between the country’s exports and imports, saw a marginal increase of 4.2% compared to the same period in the previous fiscal year. The trade deficit for July to September 2024 stood at $5.44 billion, up from $5.21 billion recorded during the same period of FY24.
The increase in the trade deficit is largely attributed to a rise in both exports and imports. Exports experienced a notable growth of 14%, climbing to $7.88 billion during the first three months of FY25, compared to $6.90 billion in the corresponding period of the previous year. This improvement in exports can be seen as a positive sign for Pakistan’s export sector, which has faced numerous challenges in recent years.
On the other hand, imports also increased significantly during the first quarter, rising by nearly 10% to $13.31 billion in 3MFY25, up from $12.12 billion in 3MFY24. The surge in imports, driven by the growing demand for goods, has contributed to the widening trade deficit. This increase in imports highlights the ongoing reliance on foreign products, which continues to put pressure on Pakistan’s balance of trade.
In September 2024, the trade deficit increased by 20.35% year-on-year, reaching $1.78 billion. This is a significant jump from the $1.48 billion recorded in the same month of the previous year. The sharp rise in the trade deficit during September is primarily due to a strong increase in imports, though exports also showed considerable growth during this period.
Exports in September 2024 rose by 13.52%, reaching $2.81 billion compared to $2.47 billion in September 2023. This growth in exports reflects improvements in several key sectors, including textiles and agricultural products, which have historically been major contributors to Pakistan’s export earnings.
However, imports saw a steeper rise, surging by 16% to $4.59 billion in September 2024 from $3.95 billion in September 2023. The rise in imports can be attributed to increased demand for machinery, petroleum products, and other essential goods, which Pakistan heavily relies on to fuel its industries and meet consumer demand.
On a month-on-month basis, Pakistan’s trade deficit also saw a marginal increase of 1.9%, rising from $1.75 billion in August 2024 to $1.78 billion in September 2024. While the growth in the trade deficit was not as steep as the year-on-year comparison, it still indicates a growing gap between imports and exports.
Exports in September 2024 were recorded at $2.81 billion, a slight increase of 1.6% from the $2.76 billion exported in August 2024. Meanwhile, imports inched up by 1.7% on a month-to-month basis, reaching $4.59 billion in September 2024 compared to $4.51 billion in August 2024.
The widening trade deficit presents challenges for Pakistan’s economy as it continues to grapple with foreign exchange reserves and debt repayment issues. A growing trade deficit puts pressure on the country’s currency and may lead to further strain on the balance of payments. While the increase in exports is a positive development, the simultaneous rise in imports underscores the need for policies that promote domestic production and reduce dependency on imported goods.
The trade imbalance also emphasizes the importance of diversifying export markets and boosting the competitiveness of Pakistani products in the global market. Efforts to strengthen export industries and reduce import reliance will be crucial for stabilizing the trade balance in the coming months.
