Pakistan’s persistent trade deficit has become a source of apprehension for the policymakers and economists with its far-reaching implications extending beyond the realm of trade, reports WealthPK. The trade deficit has been on a steady rise in recent years, as imports consistently outstrip exports. The August and September 2023 trade statistics revealed noteworthy trends and changes in trade balance. Notably, there was a 4.18% month-on-month growth in exports, with international sales of goods increasing from $2,366 million in August to $2,465 million in September. This rise signifies a positive shift and could be attributed to factors like heightened demand for Pakistani products or effective trade promotion strategies.

In contrast, Pakistan's imports witnessed a substantial drop of 12.68% during the same period, decreasing from $4,528 million in August to $3,954 million in September. This decrease in imports has significantly contributed to the reduction of trade deficit, which shrank from a deficit of $2,162 million in August to $1,489 million in September. Yearly trade statistics, comparing September 2023 with September 2022, provide insights into the country's trade performance and its economic implications. Firstly, in terms of exports, there was a slight increase of 1.15% year-on-year, with exports amounting to $2,465 million in September 2023 compared to $2,447 million in the same month of the previous year. While this growth is relatively modest, it's a positive sign, as it demonstrates a consistent demand for Pakistani goods in the international markets.

On the other hand, a substantial decline has been experienced in imports during the same period. Imports dropped by a significant 25.3%, with September 2023 imports at $3,954 million compared to $5,293 million in September 2022. The trade deficit, which represents the difference between exports and imports, showed a noteworthy decline of 47.86% year-on-year, dropping from -$2,856 million in September 2022 to -$1,489 million in September 2023. Talking to WealthPK, Dr. Khurram Mughal, former senior economist at the State Bank of Pakistan, said these trade statistics for Pakistan depicted a complex economic landscape.

While the uptick in exports is a positive sign, suggesting a certain level of competitiveness in international markets, it's essential to harness this momentum by diversifying and increasing the export base. The dramatic decline in imports raises concerns, as it could signify a slowdown in domestic demand and economic activity. “While reducing the trade deficit is a goal, it's imperative to strike a balance that maintains economic growth and stability. The policymakers should delve deeper into the root causes of this import reduction and consider its implications for the broader economy,” he emphasized. He said it's essential for Pakistan to build upon this momentum by exploring opportunities for diversifying its export portfolio and accessing new markets to fuel further export growth.

Credit: Independent News Pakistan (INP)