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Rising trade deficit

Despite government’s claim of success on the economic front, the situation on the ground remains very precarious. Since the government assumed power the export sector has been under stress and has shown no improvement at all. It is also pertinent to point out that under the vision 2025 the government has set a target of exports of $150 billion, current the exports hover at around $23 billion mark. The government’s claim that the China Pakistan Economic Corridor will spur growth and exports also seems like a dream for now.

Worryingly the country’s trade deficit has ballooned by 42 per cent year-on-year to an all-time high of $30 billion in the first 11 months of the current fiscal year on the back of falling exports and a sharp increase in the import bill. The country’s annual trade deficit was $20.435 billion when the current government came to power in 2013. It has been on the rise since then due to rising imports and falling exports. Trade deficit stood at $3.465 billion in May, a rise of nearly 61pc compared to the same month a year ago, according to the data released by the Pakistan Bureau of Statistics.

In July-May, the overall import bill rose 20.6pc year-on-year to $48.54bn. In May alone, it increased 28pc to $5.09 billion. In the year 2012-13, the import bill was at $44.950 billion. It is expected to reach over $53bn this fiscal year. Exports fell 11pc year-on-year to $1.627 billion in May after witnessing paltry growths in the previous two months. Export proceeds grew 5pc in April and 3pc in March.

The government has claimed to introduce a number of reforms, packages and policies to give a boost to the export sector but so far it has failed to bear any fruit. The $180 billion subsidy package announced for the textile sector has also proved fruitless for various reasons.

The government so far has adopted the ‘no worries’ approach but it won’t work for long and serious and urgent steps are needed to halt the growing trade deficit.

The Government’s tactic so far has been to reject fears regarding the trade deficit.

 

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