Trade Deficit with Nine Neighboring Countries Increases Sharply
ISLAMABAD:
Pakistan’s trade deficit with nine neighbouring. countries has increased by 47.55%, which stood at $4.474 billion during the first five months of the current fiscal year, FY25, while this trade deficit was $3.032 billion during the same period last fiscal year.
The increasing trade gap according to the experts is primarily accounted, for by imports from China and India. Here, the Chinese imports saw a maximum increase during the year under review, while there was a decline in Pakistani exports to China.
On a positive side, exports from Pakistan went up to Afghanistan, Bangladesh, and Sri Lanka, partly offsetting exports to China.
In FY24, trade. deficit with these countries was at $9.506 billion which, was up by 49% from the previous year’s $6.382 billion. Though exports to Afghanistan, Bangladesh, and Sri Lanka increased during July-November of FY25, exports to other countries, especially China, declined.
According to the report by State. Bank of Pakistan, these exports to the nine neighboring countries—Iran, India, Afghanistan, China, Bangladesh, Sri Lanka, Nepal, Bhutan, and Maldives—totaled 5.99% to $1.962 billion in the first five months of FY25 compared to $1.851 billion last year.
On the other hand, a massive rise of 31.8% was seen by imports which stood at 5MFY25 totaling $6.436 billion, from $4.883 billion in the same period as last year.
Imports from China and India propel the trade deficit
Imports from China surged 32.4 percent at $6.276 billion during 5MFY25 against last year’s $4.740 billion. Imports from China have. surged by 39.78% to $13.506 billion during. FY24 compared with last. year’s $9.662 billion. Regionally, imports from China comprise the highest for Pakistan, while the second largest are with India.
Meanwhile, Pakistan’s exports to China declined by 13.9%, which fell to $1.053 billion during 5MFY25 from $1.223 billion over the corresponding period last year.
Indian imports also gained. climbing. by 6.19% to $94.78 million during 5MFY25, up from $88.91 million last year. During FY24, imports from India improved by 8.87% to reach. $206.89 million, versus $190.04 million last year.
Exports to India remained steady at $0.375 million in 5MFY25, a slight increase from $0.069 million last year. Exports to India were $3.669 million in FY24, up from $0.329 million the year before.
Increase in Exports to Afghanistan, Bangladesh, and Sri Lanka
Exports to Afghanistan have risen by a whopping. 73.37% to $406.67 million in 5MFY25 from $234.56 million last year. Imports from Afghanistan. were $8.53 million, compared with $3.18 million in FY24.
Exports to Bangladesh rose by 29.76% to $313.99 million in 5MFY25, compared with $241.96 million last year. Imports from Bangladesh increased by 18% to $30.75 million in 5MFY25, compared with $26.06 million in FY24.
Exports to Sri Lanka jumped by 25.3% to $183.89 million in 5MFY25, from $146.75 million in the same period last year. This follows the recovery of the country’s economy after recession,
Other Regional Trade Developments
Exports to Nepal declined by 34% to $0.96 million in 5MFY25, compared to $1.46 million in the same period last year. Exports to the Maldives increased by 5.74%, increasing to $4.0 million in 5MFY25 from $3.83 million in the same period last. year.
No trade data were reported for Bhutan during the first five months of FY25.
Conclusion: Challenges for Policymakers
The sharp rise in the trade deficit with regional countries poses significant challenges for policymakers, With increased imports from China and India and decreased exports to China, the government needs to boost exports and manage the growing trade gap to achieve economic stability.
