Decline in imports contributes to reduce gap
By AMANULLAH BASHAR
Feb-18 24, 2002
Pakistan's trade deficit has been improved by 49
per cent in the first half of the current financial year. The
improvement in trade gap has come only because of reduction in imports
that may have an adverse effect on overall growth of the economy in
the remaining half of the year. The reduction in oil imports estimated
at around one billion dollar during the period is one of the major
players for bringing down the gap. The reduction of oil consumption in
the manufacturing sector however signals to take appropriate steps to
reactivate the industrial growth.
Though the inflow of foreign assistance offsetting
the negative impact yet situation demands to take measures to improve
the pace of economic activity within the country. More trade is
certainly better than the aid.
Besides various steps, the government is in the
process of promulgating an Ordinance to give effect to its policies
for the improvement of trade and transportation.
The goal of the project is to improve Pakistan's
competitiveness in global trade and modernizing trade and transport
related laws, simplifying and streamlining trade and transport
The business community in Pakistan has demanded of
the European Union and Northern America Free Trade (NAFTA) that they
must accord the "most favoured nation" status to Pakistan to
help it revive its economy that has been hit hard because of the Sept
The trade statistics revealed that the country
recorded a trade deficit of $578.1 million during the first seven
months that July-January of the current fiscal against $1.34 billion
of the corresponding period of last year.
The provisional figures of the trade have revealed
that trade deficit has improved by 49 per cent during the period.
Imports dived by 10 per cent $635 million to $5.733
billion from last year's $6.368 billion.
Major factor behind this slowdown in economy was
cancellation and postponement of export and import orders in the
aftermath of September 11 events. Despite all these hindrances, the
county has achieved 90.2 per cent of the target set for this period,
whereas 89.2 per cent target was achieved in the corresponding period
Exports in January were $646 million below the
target as the government had expected $761.8 million exports but it
could drag only to $697.2 million.
Imports dropped by $11.8 million to $857.8 million
against $972.8 million in January last year.
Commerce Minister Abdul Razak Dawood had recently
projected a deficit of $1 billion due to declining trend in exports
but the trade figures have not indicated much negative impact on
exports. Enhancement of EU quota would have a positive impact on
Pakistan's overall exports while signals from Washington were also
According to an estimate, the textile quota exports
to European Union recorded a big jump in value 41.9 per cent and in
quantity 36 per cent while exports to Turkey received 113.5 per cent
boost in value and 72.7 per cent in quantity during January.
The record jump is said to be the result of the
enhanced quota and duty free import package offered to Pakistan.
The quota export performance compares unfavourably
with the exports to the US which declined by 32.8 per cent in value
and 5.3 per cent in quantity during the same period.
Export Promotion Bureau has released statistics of
textile exports to Canada, which also indicate a decline by 15.9 per
cent in the value and 21.1 per cent in quantity in January. The
average unit price of textile exports decreased by 29 per cent in case
of the US, but registered an increase of 4.3 per cent for EU, 6.5 per
cent for Canada and 23.5 per cent for Turkey.
The total quota exports during January were 120.46
million square meters worth $90.8 million registering over 90 per cent
jump in terms of value and 2.8 per cent in terms of quantity.
Region wise break up of the exports shows that
exports to the US were 21.78 million square meter worth $40.5 million,
89.39 million square meter worth $46.5 million to the EU: 1.07 million
square meter worth $1.51 million to Canada and 8.22 million square
meter worth $2.24 million to Turkey.
The base ceiling of textile exports increased by
9.5 per cent in case of the US, 22.77 per cent to the EU, 11.76 per
cent to Canada and 5.21 per cent to Turkey.
The oil import bill in 2001-02 is expected to go
down by one billion US dollar mainly due to two reasons, one decline
in industrial consumption and shifting over of the oil consumption
especially in power generation and transport sectors. Another factor
instrumental in decline of the import bill is being attributed to
global fall in oil price.
Oil imports in the first half of 7 months of the
current fiscal denoted a decline of 25.61 per cent to $1.530 billion
from $2.057 billion of the corresponding period of the previous
It may be noted that oil price last financial year were around
$25-30 a barrel. However the high price trend subsides with the
beginning of the current fiscal in May-June last bringing down the oil