According to the yearly reports, Pakistan’s trade deficit widened by 20.84 per cent to $2.597 billion in January from $2.149 billion over the same month last year mainly on account of surging duty-free imports. In Fiscal year 2020, country’s trade deficit came down to $23.099bn from $31.820bn. However, in the first seven months (July-January) of fiscal year 2021, the trade deficit increased 8.24pc to $14.96bn from $13.82bn.
Global economy and domestic production are expected to multiply with growth in exports due to this increase in the trade deficit. This revival of the trade deficit recorded for the second consecutive month points to the fact that consumption has significantly increased. In regards to imports, the duty-free import value recorded an unprecedented growth of 80pc in December while it grew by 30pc in January. There is also an increase observed in Pakistan’s imports since September of 2020.
There was an increment of 27 percent with reference to dollars noted in the duty free imports in the period of July-January 2020-21. In overall imports, the share of duty-free import has surged 42pc in the seven months this year from 35pc over the same period last year
As a result of the increase in duty-free imports, in January, the import bill rose by 14.68pc year-on-year to $4.725bn as against $4.120bn over the corresponding month last year. Meanwhile, on a month-on-month basis, imports in January dipped by 5.59pc compared to December.