KARACHI: Pakistan continued to face serious deterioration in its balance of payment situation during the last fiscal year FY17 as the country has to suffer current account deficit of $12 billion in the backdrop of rising import bill and disappointing export performance.
Pakistan’s export sector depicted dismal performance during the outgoing fiscal year MFY17. The daunting task of arresting the declining export was main target of Pakistan’s economic manager who miserably failed to achieve their target.
The export sector contributed to the fall, swelling current account deficit which rose by 60 percent against the same period of last fiscal year. The current deficit in FY17 was 4% of the Gross Domestic Product GDP as opposed to 1.7% recorded in the same period of last fiscal year, SBP data shows.
In the outgoing fiscal year, the exports decline to $21.6 billion against the growth of $21.9 billion worth of goods exported from Pakistan in the same period last year. The data shows that the imports increased to $48.5 billion as compared to $41.2 billion of fiscal year FY16. Thus the trade deficit was recorded at $26.8 billion.
The services sector’s exports increased during the current fiscal year to $5.5 billion while imports stood at $9.1 billion. Services sector’s deficit during the year was $3.5 billion against $3.4 billion of the last fiscal. The accumulated trade and services deficit increased to $30.4 billion against $22.6 billion of the same period last year.
Pakistan’s textile sector contributes around 60 percent to the overall exports of the country. However, during last couple of years the textile sector has failed to increase its contribution despite a huge incentive package of Rs 180 billion announced by the Prime Minister to support the ailing sector. The sector, according to experts, faces bleak future.
Remittances are another big factor that support balance of payment situation. The internal financial conditions of some middle eastern countries including Saudi Arabia also played negative role as the workers’ remittances suffered and remained $19. 3 billion against $19.9 billion sent by overseas Pakistanis during the outgoing fiscal year.
The drop in remittances was a reflection of the economic slowdown in the middle east that was a direct consequence of declining trend in world oil prices. Pakistan has long been relaying on the inflow of remittance from the gulf countries. The significant decline in remittances was also due to the non-payment of dues to workers by employers including large number of expatriates were sent back to their home countries, those also include Pakistanis.
Keeping in view the swelling current account deficit experts have been constantly calling for reviewing country’s trade policy but government has failed to respond to their call.
The current account, broadest measure of trade, covers flows of goods, services and investment. The current account is an important indicator of economy’s health.
Published in Daily Times, July 20th , 2017.
