Pakistan’s Monthly Trade Deficit Reaches an All-Time High

Pakistan’s trade deficit widened by 162.4 percent during the month of November, owing to an almost threefold increase in imports compared to exports.

The trade deficit, which represents the gap between imports and exports, increased for the fifth successive month in November, rising to $5.107 billion from $1.946 billion. In terms of value, this is the biggest trade deficit ever recorded in a single month.

So far, the trade deficit has increased by more than 117.25 percent in the first five months of the current fiscal year. The merchandise trade deficit increased to $20.746 billion in July-November 2021, up from $9.549 billion in the same period last year.

Since December of last year, the trade deficit has been expanding, owing primarily to an exponential increase in imports and moderate development in exports. From July to November 2021, the import bill increased by 71.59 percent to $33.111 billion, compared to $19.296 billion in the same period last year. The import bill increased by 94.41 percent to $8.01 billion in November 2021, up from $4.12 billion the previous month.

The highest-ever growth in imports also aided the Federal Board of Revenue in collecting the most revenue possible at the point of importation — sales tax, withholding tax, and customs duty. However, the government’s fight against the bloated trade deficit is reversing, putting external pressure on the economy due to record-high imports.

Notably, the import of vehicles, machinery, and vaccinations has increased, pushing up the import bill. Moreover, the government’s attempt to stimulate raw material imports also increased the import bill. Because of the rising demand for energy in the local market, oil prices have also risen significantly, pushing up the import bill.

Conversely, exports increased by 27 percent year over year to $12.365 billion in July-November 2021, compared to $9.747 billion in the same period last year. In November alone, exports increased by 33 percent to $2.903 billion, compared to $2.174 billion the previous month.