In imports, we trust

Vision 2025 had set a target of $150 billion by 2025. A slight edit though, would make it look more realistic – if only, exports were to be replaced by imports. And that could come as early as 2023. Such has been the rise in imports of late. The latest monthly import numbers released by the PBS puts the figure at a whopping $5.6 billion for January 2018 – by far the highest ever monthly import figure.

The 7MFY17 cumulative imports now stand at $34.5 billion – up 19 percent year-on-year. Exports have grown too, albeit at a much more modest rate of 11 percent year-on-year. Last time monthly exports crossed $2 billion was way back in January 2015. The trade deficit has touched a new all-time monthly high of $3.6 billion. It was only less than two years ago, when $3.5 billion was total imports. The cumulative 7MFY18 trade deficit at $21.5 billion is already higher than the total exports in FY17.

This column acknowledges that all imports are not necessarily bad. And that, imports do rise in an economy striving to break its shackles, in the quest to sustain growth. It is the quality of imports that surely does warrant a look – a long hard one at that. Granted that the rise in imports has a significant lot to do with the pace of Cpec related progress. Granted that the rise in international oil prices also has its say in the current scenario. It is the other half of non-petroleum, non-machinery imports that has grown out of bounds.

Even within the machinery imports, a significant chunk is that of power related machinery. And with all the thousands of additional megawatts being pumped in the system, left, right, and centre – more fuel would be needed to be burnt. And in most cases, that fuel would be imported LNG, if not furnace oil. The shift towards base load indigenous fuel generation is rather slow – and there seems no stopping to the ever rising petroleum related imports.

The machinery group import has averaged around a billion dollar per month – almost double from three years ago. It remains to be seen, how much of this would require more fuel and how much of it would be of more productive use.

Thanks to the ever rising consumerism, the rise in transport and food groups is also unparalleled. Combined, this could potentially stand at $10 billion for the full year. With the commodity prices inching up, metal group imports alone, could be billed at $5 billion this year. The lopsided FTA with China would also ensure the ‘other imports’ category continues to grow – and even at modest below average rate – would cost around $10 billion to the bill.

Back in November, BR Research attempted to estimate the import bill of FY18 based on four months data (Read: ‘scary rise in imports’ published Nov 15, 2017). The estimate was $59 billion. It seemed a little distant back then. It seems smack in the face three months later.