Muhammad Asad Tahir Bhawana

In the financial year 2022-23, Pakistan’s current account recorded a deficit of $2.6 billion, marking a significant improvement compared to the deficit of $17.5 billion in the previous year. This positive change can be attributed primarily to a contraction in imports, according to the monthly economic outlook (July) of the Ministry of Finance. Notably, in June 2023, the current account displayed a surplus of $334 million, a notable turnaround from the deficit of $2.321 billion in the same month of the previous year. This improvement was largely driven by a positive shift in the trade balance. During FY23, exports on a Free on Board (FoB) basis experienced a decline of 14.1%, amounting to $27.9 billion, as compared to $32.5 billion in the previous year. Similarly, imports on a FoB basis also saw a substantial decrease of 27.3%, reaching $52 billion, compared to $71.5 billion in the previous year.

Consequently, the trade deficit for FY23 decreased to $24.1 billion, a considerable improvement from the $39.1 billion trade deficit reported in the previous year. The exports of services during FY23 showed a modest increase of 2.7%, reaching $7.3 billion, compared to $7.1 billion in the preceding year. Conversely, imports in services experienced a significant decline of 38.0%, amounting to $8 billion, down from $12.9 billion the previous year. As a result, the trade deficit in services was notably reduced by 87.7%, reaching $0.7 billion, as opposed to $5.8 billion reported in the previous year. According to Pakistan Bureau of Statistics, the overall exports in FY23 stood at $27.7 billion, registering a decline of 12.7% compared to the $31.8 billion recorded in the previous year. Notwithstanding the overall decline in exports, certain key export commodities demonstrated positive growth during the period under review.

These included raw cotton, which recorded a 322.8% increase in quantity and a 104.8% increase in value; fish & fish preparations (a 28.9% increase in quantity and a 15.2% increase in value), footballs (a 28.8% increase in quantity and a 24.3% increase in value), footwear (a 35.5% increase in quantity and a 13.7% increase in value), surgical goods & medical instruments (a 5.9% increase in value), and pharmaceutical products (an 85.6% increase in quantity and a 22.0% increase in value). On the other hand, the total imports in FY23 decreased to $55.3 billion, marking a notable decline of 31.0% from the $80.1 billion reported in the previous year. The main imported commodities during this period included petroleum products ($7.6 billion), petroleum crude ($4.9 billion), liquefied natural gas ($3.7 billion), palm oil ($3.6 billion), plastic materials ($2.3 billion), iron & steel ($1.9 billion), and medicinal products ($1.3 billion).

Credit: INP-WealthPk