Exports to increase to $30b, imports to touch $64b by end of FY2024-25

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ISLAMABAD - Pakistan’s exports would increase to approximately $30 billion whereas imports would touch mammoth $64 billion by the end of fiscal year 2024-25.

The country’s exports would touch $23.635 billion during ongoing fiscal year 2020-21, whereas imports are expected to reach $46.168 billion. Trade deficit is expected at $22.533 billion in the current year. Exports would surge to $24.937 billion and imports to $50.19 billion in the upcoming financial year 2021-22, the documents stated, which were released by the IMF after approval by its executive board of directors of the modified extended fund facility (EFF).

Pakistan’s exports would enhance to $26.358 billion, $27.967 billion and $29.659 billion in fiscal years 2022-23, 2023-24 and 2024-25 respectively. On the other hand, imports would also continue to rise. Imports are projected to increase to $54.455 billion, $59.109 billion and $64,018 billion in fiscal years 2022-23, 2023-24 and 2024-25 respectively.

The documents showed that Pakistan’s current account deficit (CAD) would also increase in next few years. The CAD is projected at $4,154 billion (1.5 percent of the GDP) in ongoing financial year, which would increase to $5.419 billion (1.8 percent of the GDP) in next fiscal year and to $6.527 billion (2 percent of the GDP) in year 2022-23. The CAD would enhance to $8.305 billion (2.4 percent of the GDP) in 2023-24 and $9.949 billion (2.9 percent of the GDP) in 2024-24.

The current account deficit is forecast to widen to 1.5 percent of GDP in FY2021, as a result of the recovery and it should continue to gradually widen towards 3 percent over the medium term with stronger imports triggered by revived domestic demand and exports. However, the market determined exchange rate, together with adequate monetary policy, would help strengthen reserve cover to over 3½ months of imports by FY 2025. The government is expecting a current account deficit of 0.5-1.5 percent of GDP in FY2021 as imports pick up on the back of recovery in domestic demand while remittances maintain their recent record run and exports continue to recover. Gross international reserves should gradually strengthen to three months of imports coverage amid continued high official inflows. With the Covid-19 second wave still unfolding around the world and a third wave beginning in Pakistan, however, the outlook is subject to a high level of uncertainty and downside risks.

However, the outlook remains highly uncertain. On the upside, a successful containment of the pandemic during the remainder of FY2021 until vaccines are gradually deployed would result in a stronger recovery in the service sector and the economy as a whole. While on the downside, if the trajectory of the pandemic evolves more unfavorably, policy adjustments could be needed to support the economy and the most vulnerable.

The current account deficit fell to 1.1 percent of GDP in FY 2020, better-than-projected at the Rapid Financing Instrument (RFI), and turned into a surplus of 0.4 percent of GDP in the first half of FY 2021. The main drivers include the fall in oil prices, increase in inflows of remittances, import compression following the decline in domestic.

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