Services trade posts $3.84 billion deficit in nine months

Services trade deficit rose sharply by 34 percent during the first nine months (July-March) of this fiscal year (FY18), mainly due to higher import bill and lower export proceeds. Economists said that rising service trade deficit will put further pressure on the external account, which is already presenting a worsening picture. The country's current account deficit crossed $12 billion mark in nine months of current fiscal year followed by higher goods import bill.
"The higher services deficit is a matter of concern in the current situation, when the country's foreign exchange reserves are depleting for financing of current account deficit and external debt servicing," they added. Pakistan has not received a single penny on account of Coalition Support Fund (CSF) during this fiscal year, because of which services trade has posted a massive deficit. The country had received $550 million on account of logistic support during July-March of FY17.
Economists called for a long term policy to increase services exports and contain rising imports. According to State Bank of Pakistan, the country's services trade posted a deficit of $3.848 billion during July-March of FY18 compared to $2.879 billion in the same period of last fiscal year (FY17), depicting a notable increase of 34 percent or $969 million.
The detailed analysis revealed that during the period under review services sector exports fell by 10 percent. Pakistan's services sector exports stood at $3.861 billion in first nine months of this fiscal year against $4.314 billion in the corresponding period of last fiscal year, down $453 million. Similarly, services sector imports increased by 7 percent or $516 million to reach $7.709 billion in July-March of current fiscal year up from $7.193 billion in the same period of last fiscal year.
The massive transport and travel payments largely contributed to higher import bill. The combined imports of these two sectors constituted some 59 percent of total services sector imports. Import bill of transport and travel sector moved up by 6 percent and 7 percent to $2.969 billion and $1.56 billion, respectively in first nine month of current fiscal year. During the period under review, the country earned $705 million on account of transportation services, $283 million from travel, $787 million from telecommunications and computers services, $958 from government goods and services, $53 million from construction, $78 million through financial services and $35 million on account of insurance sector.
Meanwhile, during the period under review, imports payment of telecommunication stood at $357 million, financial sector $116 million, insurance $167 million, some $192 million as charges for use of intellectual propriety and an amount of $456 million as government goods and services. Month-on-month basis, during March 2018, services trade deficit stood at $322 million with $750 million imports and $428 million exports.