Karachi, March 30, 2020 (PPI-OT): Trade deficit decreased 15% MoM in Feb-2020
During Feb-2020, the trade deficit decreased by 15% MoM to US$1,583mn from US$1,860mn in Jan-2020. This was mainly on account of a 9% MoM reduction in imports during the month. Machinery imports shrank by 27% MoM, contributing over half the decline in overall imports, whereas iron and steel scrap imports (down 29% MoM) in metals category, agri and other chemicals (down 14% MoM) and other imports (down 24% MoM) also witnessed sharp contraction during the month. Meanwhile, exports also witnessed a reduction during the month, falling by 3% on MoM basis, where no major category recorded an improvement (barring other exports).
Going forward, the key thing to watch out for is how the coronavirus pandemic affects the external trade scenario. For instance, while some respite might be found to imports from categories such as transport (due to plant closure of auto companies) and petroleum (declining demand amid lockdowns), there might also be some pressure on exports of textiles due to cancellation/postponement of orders.