Pakistan’s widening trade deficit is becoming a challenge for its policymakers. In the first quarter of the current fiscal year, the trade deficit has posted a growth of more than 100%. According to the Pakistan Bureau of Statistics (PBS), the exponential increase in the trade deficit is due to the three-fold increase in the country’s imports compared to exports.
The trade deficit reached $11.6 billion in July-September 2021 compared to $5.8 billion over the same month last year. An inflated trade deficit is a serious threat as it places pressure on the ballooning current account deficit of the country.
The government hopes that an increase in remittances through Roshan Digital Accounts (RDA) and growth in export proceeds will help mitigate the pressure to a large extent.
The trade deficit has also increased due to government spending of $448 million in September and August for vaccine import. The purchase of vaccines is vital to immunize a population of 220 million against COVID-19.