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Commerce Ministry says machinery imports led to $12b trade deficit

Commerce Ministry says machinery imports led to $12b trade deficit

 

ISLAMABAD: The Commerce Ministry has observed that the higher machinery imports led to foreign trade deficit of $12 billion in third quarter of the current fiscal year. Imports increased 3.8% over the corresponding period of last year.

“However, total volume of imports decreased to Rs 438.36 billion in October from Rs 466.77 billion in September. Imports averaged Rs 55.61 billion from 1957 until 2014, reaching an all time high of Rs 472.22 billion in August this year and a record low of Rs 96 million in April of 1959,” a ministry source said.

He said that imports were also highly concentrated in few items, including machinery, petroleum products, chemicals, transport equipment, edible oil, iron, steel, fertiliser and tea. These imports accounted for 53.4% of total imports.

The source said that over 40 percent of imports originated from just seven countries, the US, Japan, Kuwait, Saudi Arabia, Germany, UK and Malaysia.

“The shares of US and Japan, with some fluctuations, exhibited a declining trend because of the shift in the import of machinery/capital goods and raw materials to other sources as well as Saudi Arabia had also emerged as major supplier to Pakistan followed by the US and Japan,” he said, adding that the share of Pakistan’s imports from Saudi Arabia had been rising due to higher imports of POL products, whereas, Malaysian share showed both rising and falling trends over the years mainly on account of fluctuations in palm oil prices.

The source said that the ministry realised a little bit about upcoming trade deficit in the beginning of the fiscal year when imports increased sharply.

“This increase in imports was mainly driven by higher demand from machinery, petroleum, fertiliser and metals and the rise in the import bill was largely the result of higher quantum, as the price impact was negative,” he added.

The source said that the highest contribution to machinery imports came from the construction sector followed by telecom, textiles and power generation followed by import of POL products.

“This increase was largely driven by higher demand for furnace oil, thinner for paints, lubricating oil and motor spirit oil,” the source said.