The foreign trade statistics for goods recently released by Pakistan Bureau of Statistics (PBS) depict a 6.75 percent YoY fall in balance of trade deficit of $16.518 billion in 10MFY13.
The country’s goods imports declined by $377mn, down by 1% YoY, an escalation in exports of $818 million, up by 4.2% YoY, in 10MFY13 resulted in pulling down the overall trade balance deficit (goods).
“We attribute the decline in imports to the falling oil prices, where the international oil (Arab Light) has declined by 3% YoY in 10MFY13,” said InvestCap analyst Muniba Saeed.
The increased exports, she said had in turn emanated from flourishing textile exports mainly to China and Hong Kong where yarn and cloth have been the major export items.
On a MoM basis, goods exports declined by a meager 0.19% to $ 2130mn whereas imports increased by 6%MoM to $ 3909 million in April-13. The monthly trade balance deficit of goods thus levelled at $1.779 billion in Apr-13, 14.55% up MoM.
While the deficit balance of trade has declined in 10MFY13, adding an additional $1.195 billion to the current account as opposed to last year, home remittances are expected to provide further support, having posted a growth of 6.37%YoY, reaching $11.5 billion in 10MFY13. The worker remittances during April-13 touched $1.216 billion compared to $1.119 billion in Mar-13. While on a YoY basis, the head increased by 6.56% in Apr-13. The monthly average inflow of remittances stood at $1.157 billion compared to $0.905 billion during the corresponding period last year.
“After the bent witnessed earlier in the year in the trend for remittances we see the same having taken up an upward trajectory,” viewed Muniba.
Although, the analyst said, narrowing trade deficit and rising remittance are providing a breather to the current account balance, however, the huge outflow in the form of interest expense is a major concern for the Current Account.
In addition to this, she said, declining Foreign Direct Investment is also another major anxiety. “We expect the current account deficit to reach at $2.5 billion at the end of FY13,” said the analyst. Whereas the trade deficit is expected to narrow down to $14.8 billion (-6%YoY) in the current fiscal year, she predicted.
