Pakistan Trade Deficit Decreases 31% YoY to $1.5 Billion in October 2024

In recent economic developments, Pakistan has witnessed a notable reduction in its trade deficit, which has contracted by 31% year-on-year (YoY) to reach $1.5 billion in October 2024. This significant decrease is a positive indicator for the country's economy, reflecting a shift in the balance between exports and imports. The data, released by the Pakistan Bureau of Statistics (PBS), highlights the ongoing efforts to stabilize the economy amidst various challenges.

To put this into perspective, the trade deficit for October 2023 was recorded at $2.17 billion. The narrowing of the trade gap in October 2024 can be attributed to a rise in exports coupled with a decline in imports. According to brokerage house Arif Habib Limited, the trade deficit of $1.5 billion in October 2024 is the lowest figure observed since September 2023.

Exports for October 2024 amounted to $2.97 billion, marking an increase of 10.64% compared to the $2.69 billion recorded in the same month last year. This growth in exports is a promising sign, suggesting that Pakistani goods are gaining traction in international markets. On the other hand, imports fell to $4.47 billion, down 8% from $4.86 billion in October 2023. This reduction in imports indicates a potential shift towards more self-reliance and a focus on domestic production.

When examining the month-on-month (MoM) performance, the trade deficit decreased by 17.69% in October 2024 compared to $1.82 billion in the same month last year. This consistent decline in the trade deficit is encouraging and reflects a broader trend of improving economic conditions.

Looking at the first four months of the fiscal year 2024-25 (4MFY25), the trade deficit has narrowed by 5.59%, totaling $6.97 billion, down from $7.39 billion in the same period last year. Exports during this timeframe increased by 13.45%, reaching $10.88 billion compared to $9.59 billion in the previous year. However, imports also saw a rise of 5.17%, totaling $17.85 billion, up from $16.98 billion recorded in 4MFY24. Despite the increase in imports, the trade deficit of $6.97 billion in 4MFY25 is the lowest level since 4MFY14, indicating a positive trend in the country’s trade dynamics.

The contraction of Pakistan's trade deficit is a significant development that reflects the country's ongoing economic adjustments. As exports continue to rise and imports stabilize, there is hope for a more balanced trade environment. This trend not only supports the economy but also enhances the potential for sustainable growth in the future. It is essential for policymakers to maintain this momentum and focus on strategies that further promote export growth while managing import levels effectively.