Imports in February 2019 touched a 29-month low at $4.1 billion - down 12 percent year-on-year, and 7 percent month-on-month. Exports on the other hand, remained flat year-on-year, and went down 7.5 percent month-on-month. The provisional trade numbers released by the Pakistan Bureau of Statistics (PBS) show the monthly trade deficit in February went down by 20 percent year-on-year and 7 percent month-on-month to $2.2 billion, at a 32-month low.

For 8M, the trade deficit is down a massive 11 percent year-on-year. The slowdown in imports has been much pronounced in the last few months. The economic slowdown is ever so evident, reflected in the industrial production numbers. Some respite has come in the form of significantly lower machinery imports, which has averaged two-third of the FY18 average of $1.1 billion. The advent of RNLG based power plants, instead of FO, has played a vital role and the impact on imports will be more pronounced in the months to come as more LNG based power comes online.

Exports on the other hand, have not picked up as fast as some would have wanted. The overall export growth of less than 2 percent year-on-year in 8MFY19, despite massive currency depreciation brings more worries than cheers. That said, export growth last year was in double digits, and it would take some time before the recent efforts to revive and incentivize the textile industry (60% export share) start yielding the desired results. The volumetric growth of late in value added textile sector has been in double digits, which is a healthy sign, and it should soon start reflecting in overall export numbers.

In terms of full year numbers, exports may struggle to cross $24 billion – given the historical average of two-third achieved in two-third of a year. Imports have also usually shown a similar trend, but the decline in imports is a more recent phenomenon and is likely to stay around for a few more months. Should the last quarter trend in imports continue for the next four months – FY19 imports should clock in at $54 billion – resulting in no less than an 18 percent decline in trade deficit.