Floods likely to hike trade deficit over fears of decline in exports

ISLAMABAD: Pakistan will be facing a trade imbalance in the ongoing fiscal year owing to devastating floods with deficit likely to hit US$3 billion, ARY NEWS reported.

According to sources in the finance ministry, the export target for the fiscal year 2022-23 will likely not be achieved as Pakistan will face a decline in exports of fruits, vegetables, tobacco, cement, and leather products.

“The exports in other key production sectors will also likely face a decline,” they said.

On the other hand, the country will be forced to import wheat, pulses, sugar, construction machinery and medicines. “This imbalance in exports and imports will likely hike the trade deficit to US$3 billion,” they said while quoting a finance ministry document.

Earlier, a Finance ministry document has revealed that the economic growth in the country could fall below to 2.3 percent in the ongoing fiscal year 2022-23 after floods caused losses of overRs2,000 billion which included damages to lives, infrastructure, crops and livestock in the affected areas.

According to sources in the ministry, a new strategy would have to be developed to move forward while keeping in view the losses and devastation from the floods.

The economy has suffered an Rs2,000 billion losses owing to floods and the inflation is likely to remain between 25 to 27 percent, the report said. It highlighted that the growth rate was set at 5 percent for FY2022-23 however, it seems difficult to achieve targets set in the annual development plan.

The growth in key crops could likely fall to 0.7 percent from an expected target of 3.9 percent, growth in industrial sector could drop to 1.9 percent from an expected 5.9 percent while growth in services sector could decline to 3.5 percent from an estimated 5.1 percent in the ongoing fiscal year.

Read More: MIFTAH ISMAIL SAYS ‘INFLATION RATE EXPECTED TO GO UP DUE TO FLOODS’

It shared that economy which is already facing issues regarding balance of payment and debts will be hurt further from floods and it could result in hike in inflation. Assistance from friendly countries, and global development partners would be required to give a helping hand to the economy, the report added.