Home / Business / FEBR hails govt as trade deficit shrinks by 15% in one year

FEBR hails govt as trade deficit shrinks by 15% in one year

Lahore:    As the government is going to complete its one year in power the
Friends of Economic and Business Reforms has hailed it for managing to
narrow down the trade deficit by over 15 percent to around $32 billion in
2018-19 mainly due to drop in import from China.

FEBR President Kashif Anwar, appreciating the government, said that it has
become successful to strengthen the Safeguard Mechanism to protect domestic
products against surge in Chinese imports, however, the authorities have
failed to enhance exports in this fiscal year, which is a great challenge
for them.

He said that Pakistan has now comparative advantage in the recently signed
FTA phase-II as compared to the agreement signed in 2006 due to efforts of
this government, as Pakistan’s trade deficit with China has shrunk by over
$3 billion during in 2018-19. The trade balance between Pakistan and China
has shrunk to around $11 billion during the Fiscal year of 2018-19 as
compared to the previous year of $14 billion. He said that the trade was
earlier in China’s favour under Free Trade Agreement (FTA)-I.

However, in April 2019, Pakistan and China agreed on second phase of FTA to
reduce the Pakistan’s trade deficit. Prior to the signing of Phase-II of
the FTA with China, the government took into account the interests of the
Pakistani industrialist through substantive consultation process with
different chambers and trade associations.

According to the data, the trade deficit between Pakistan and China was
continuously increasing till the fiscal year 2017-18 when it has reached to
$14 billion.

However, in last fiscal year, the trade imbalance between two countries had
come down by $3.2 billion.

He suggested taking serious measures for enhancing exports too, as the data
showed that exports to China has not shown healthy growth as compared to
the imports of Pakistan from China.

He said that overall country’s exports contracted in June of 2018 despite
over one-third depreciation of the rupee against the US dollar. The
government missed its export target by $4 billion as total exports stood
below $23 billion at the end of fiscal year 2018-19.

He said that the government also missed the trade deficit reduction target
by $5.8 billion, although the gap between exports and imports shrank by
over 15 percent.

Overall, the trade deficit, which stood at $37.6 billion in the preceding
fiscal year, shrank to $31.8 billion in the just ended fiscal year 2018-19.

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