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Trade deficit surges 78pc

The trade gap ballooned as imports surged at a faster clip than exports during the month under review after a slight narrowing in deficit in previous month owing to reduced working days of 15 on account of Eid holidays, Quaid-i-Azam's birth anniversary, assassination of former prime minister and disturbances that followed the tragic event.

Latest official figures showed that import bill increased by 51.48 percent to $3.529 billion in January 2008 against $2.329 billion last year. While exports grew by 25.60 percent to $1.476 billion in January 2008 against $1.175 billion last year.

This growth in imports and exports was mainly due to delayed shipments, which were due in December last but could not shipped because of two weeks reduced working days of ports and other departments.

For the first seven months (July-Jan) of 2007-08, the trade deficit increased by 35.15 percent to $10.327 billion against $7.641 billion over the same period of last year.

With the rising imports bill, the economist estimated that the trade deficit this year would easily cross the figure of $15 billion mark, the highest ever deficit recorded in the history of the country.

Analysts said the trade account worsened sharply because of rising oil import bill besides heavy imports of food grains to meet the domestic demand particularly the wheat, pulses etc. But exports growth has also slowed down, which also slightly worsened the trade account.

Hopes that the deficit would narrow have been blocked by spiking oil prices and the price Pakistan has to pay to import oil would create serious balance of payment problem for the economic manager of the newly elected government.

Pakistan exports also slowed down to major markets of United States as a result of slowing down in demand in the wake of recession in the US economy.

Official figures showed that exports grew by 5.95 percent to $10.152 billion during the July-Jan period of the current fiscal year against $9.582 billion last year. The government projected an export target of $19.2 billion in the trade policy last year.

For achieving the target, the exports proceeds should be in the vicinity of $9.048 billion in the next five months (Feb-June) 2007-08. However, with a snail pace growth achieved in exports in the seven months last, it is seemed unlikely that the commerce ministry will even reach to closer position of their projected target.

On the other hand, the import bill reached to $20.480 billion in July-Jan period of the current fiscal year up by 18.90 per cent from $17.224 billion. Though the government has not projected any target for import bill in the trade policy but estimates shows that it would easily reaches around $35 billion by end June 2008.