News Update: – 25, February 2020 According to the export-import statements. Pakistan’s economy faces many severe trials in terms of a moderately high inflation rate, lower economic growth, and food shortages.
While there are few positive indicators that lead to suggestions that the economy is likely to take a turn in the coming months. The recent statement at the conclusion of the International Monetary Fund (IMF) mission to Pakistan on February 14 highlights that the economy has stabilized.
Furthermore, the real exchange rate is in line with the fundamentals and inflation is expected to begin to fall in the next few months. Although economic conditions always carry a certain degree of volatility that affects economic stability, the government must ensure that it adopts viable policies. These efforts should include, among others, the continuous strengthening of dollar reserves to reduce currency unpredictability.
In addition to that, the Pakistan Bureau of Statistics (PBS) reported that the first seven months of fiscal year 20 showed a 15.6% decrease in imports during the same period of fiscal year 19. While the large-scale engineering index (LSM) in December 2019 was 9.66% higher than the value reported in December 2018. The main export-based industries, including textiles, food and beverages, and leather products registered growth positively.
Yet, efforts must be completed to increase the export and import growth of Pakistan. It is a matter of concern in 2.2%. The 27.9% drop in the trade deficit highlights the changing trend in the external front.
Another source that displayed the current account deficit, reported by the SBP in the 2019 calendar year, was $ 7.4 billion, a 62% reduction from $ 19.5 billion in 2018. This change was mainly due to the decrease in import payments for goods of approximately $ 10.6 billion and import payments for services of $ 1.15 billion. The trade balance decreased by $ 12 billion. This is reflected in the fall of the current account deficit. The decline in imports was a major driver of the increase in gross foreign exchange reserves of the SBP, which shot up from $ 9 billion in CY18 to $ 13.2 billion in CY19, a change of approximately 46%.
While the Machinery and electrical appliances and mobile phones were the only important import items that reported a significant increase in the first seven months. Imports of machinery and electrical appliances increased by 36.64%, while imports of mobile phones increased by 79.5%.
On the other hand, there was a slight reduction of 1.67% in the import of power generating machinery. Imports of office machinery, textile equipment and structure, and mining machinery decreased. Growth compression is probably an important factor in reducing import demand.
Lastly, Imports from the transport group decreased by around 45%, with a decrease in the importation of completely demolished and semi-demolished units as the main contributing factor. In the oil group, imports of all products declined, except liquefied petroleum gas (LPG).
Furthermore, imports of textile products fell 18.7%. In addition, imports of the metal group fell 19.5% but imports of iron and steel scrap increased 6.4%. Finally, fertilizer imports decreased by 32.3% as local production increased.