Pakistan's trade deficit shrank by 18% in July 2022
According to figures made public by the Pakistan Bureau of Statistics (PBS) on Tuesday, Pakistan's trade deficit shrank by 18% in the month of July 2022.
The decrease in import bills may
be responsible for the reduction in the trade imbalance. In July 2022, the
nation's import bill decreased by 13% to $4.86 billion from $5.57 billion in
the same month of the previous year.
However, compared to the same
month last year, when exports totaled $2.34 billion, they decreased by 5.17
percent to $2.22 billion in July this year.
In July 2022, the trade imbalance
significantly decreased from $4.96 billion in June 2022 to $2.64 billion, a
46.76% decrease. When compared to June 2022, when it was $7.88 billion, imports
fell 38% to $4.86 billion in July 2022.
In the meantime, exports also
decreased by 24% to $2.22 billion in July 2022 from $2.92 billion in June 2022.
According to the calculations, a
40% drop in oil prices would transform the deficit into a surplus assuming no
change in demand. This suggests that the trade gap might have been closed if
Pakistan had been able to obtain cheaper energy from Iran or Russia.
Indeed, that might not have been
a wise course of action and could have had severe geo-economics penalties. This
also demonstrates that Pakistan's economy may stabilize if the oil price supply
shock brought on by the conflict in Ukraine stops.
The sole method of protecting
against external economic shocks is to build up foreign exchange reserves.
