Surge in imports

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ACCORDING to the Pakistan Bureau of Statistics (PBS), Pakistan’s imports increased almost 25%, or $1 billion, to a 17-month high at $5 billion in December 2020 compared to slightly over $4 billion in the same month of previous year. This was the highest growth in imports since June 2018 and as a result trade deficit widened by 32.04 per cent to $2.683 billion in December from $2.032bn over the same month previous year.

State Bank of Pakistan (SBP) has justified the spike as growth driven and export-tilted, attributing the growth to an increase in import of plant and machinery but trade data shows major growth in imports stemmed from the import of food items (wheat, sugar and cooking oil), cotton, fertilizer and automobiles. The food inflation is rising and the Government has to allow more imports of sugar and wheat to check their prices and therefore, the trend is likely to continue in coming months. No doubt, the current account balance which records major international payments and receipts stands in surplus at $1.1 billion in the first half of the current fiscal year but the trend could change due to continued rise in imports especially since September last year. Experts say continuous decline in imports in the last two years had provided some breathing space to the government in managing external accounts despite a downward trend in exports. However, rebounding imports are likely to create pressures on the external side and the situation could become more worrisome if apprehensions about a possible fall in remittances by overseas Pakistanis come true in coming months as a large number of Pakistanis have lost jobs due to economic uncertainty in the Gulf countries. Sustainable solution demands increased focus and better planning for agricultural growth as the country has the potential not only to meet its own needs but also produce surplus for exports, industrialization with transfer of technology and tapping export potential of IT.