ISLAMABAD: In a significant shift that showcases the resilience of the economy, Pakistan’s trade deficit has shrunk by 31.1% year-on-year in October 2024. The deficit now stands at $1.5 billion, down from $2.17 billion in the same month last year, according to The News.
This change indicates an improving external financial situation for Pakistan, particularly concerning the long-standing current account deficit (CAD). The monthly trade deficit also saw a 17.7% decline from $1.82 billion in September.
These developments bring a glimmer of hope amid challenging economic conditions. For the first four months of the fiscal year 2024–25, the cumulative trade deficit has reached $6.97 billion, a 5.6% drop from $7.39 billion in the same period last year.
Several factors contribute to this reduction in the trade deficit. Strict government policies aimed at easing foreign exchange constraints have led to a notable decrease in import demand. These measures have not only curbed outflows but also pressured sectors reliant on imports.
On the other hand, exports have shown impressive growth. In October 2024, they rose by 10.64%, reaching $2.975 billion. This marks the 14th consecutive month of export growth, providing essential support against the declining trade deficit. Year-on-year, exports have consistently improved since September 2023, with growth rates ranging from 1.67% to 29.27%. Comparing October 2024 with September, exports increased by 4.9%, while imports fell by 3.9%.
October’s data reveals a marked decline in imports, which dropped by 8.02% to $4.47 billion. This is the first month since February 2024 that imports have decreased, contrasting sharply with previous months when imports surged, including a notable rise of 63.2% in April. The government’s initiatives to stabilize the rupee and tackle the CAD have been crucial in this shift.
During the period from July to October 2024-25, cumulative exports climbed 13.45% to $10.88 billion. Imports rose modestly by 5.17% to $17.85 billion. This resulted in a trade deficit of $6.97 billion for these four months, down from $7.387 billion in the same timeframe last fiscal year.
Additionally, the Pakistan Bureau of Statistics (PBS) reported on services trade for the first quarter (July-September). The country imported $2.6 billion worth of services while exporting $1.9 billion, leading to a services trade deficit of $698.9 million. This shows an improvement from $893.3 million in the same period last year.
In September 2024 alone, services exports totaled $657 million, while imports reached $882 million, creating a deficit of $225 million. This reflects a 20.5% reduction compared to August, when the deficit was $283.2 million. Year-on-year, September 2024 services exports increased by 17%, while imports decreased by 4%. This trend highlights a growing efficiency in service exports, vital for diversifying Pakistan’s economic landscape.
