‘Trade deficit due to investment in CPEC’

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The Pakistan Economy Watch (PEW) on Sunday welcomed widening trade deficit terming it a sign of heavy investments in the economic corridor which is a fate-changing project.

The situation would change after Pakistan start receiving return on investment in the economic corridor, it said. Trade deficit swelled to Rs 1.76 billion in the first four months of the current fiscal which was Rs 1.08 billion in the corresponding period. The 63 per cent jump in the deficit in due to falling exports, increased imports and outflow of money required to buy machinery for CPEC, said PEW President Dr Murtaza Mughal.

In a statement issued here, he said that this was for the very first time in the history of Pakistan that trade deficit which was bound to put pressure on balance of payments situation was a welcome development.

The trade deficit jumped from 1.1 per cent of the GDP to 1.7 per cent but it seemed like a temporary phase as it was not based on consumption but investment, he said.

Dr Murtaza Mughal said that exports fell to $6.86 billion in the first four months as compare to last year’s exports worth $7.09 billion. This trend must be arrested through policy intervention, he said.

On the other hand, the imports jumped from $13.28 billion to $13.56 billion which should be noticed. The country was paying half of the import bill through remittances that fell by 4 per cent to $6.26 billion due to subdued oil prices, he said.