Government eyes bright future as exports, imports soar in FY24

July 31, 2023 (MLN): Amidst taking tough decisions to secure the deal with IMF and much-needed assistance from friendly countries, the government is filled with hope and optimism for FY24 as exports and imports are anticipated to experience a gradual and steady increase.

In its Monthly Economic Update and Outlook for the month of July 2023, the Ministry stated, “For FY24, it is expected that both exports and imports will gradually increase in the coming months. Taking other factors into account, the current account deficit will remain within the sustainable limit in FY24.”

Amid the domestic and global scenarios, exports of goods and services as per BOP data in the month of June are on decreasing trend, which declined by 16.0% and 29% on MoM and YoY basis, respectively.

Similarly, declining global commodity prices and contained domestic economic activities reflected in import numbers, decreased by 17.7% and 54.9% on MoM and YoY basis, respectively, the report added.

This is also reflected in contained trade deficit for goods and services. Despite the decline in workers' remittances, significant decline in trade deficit reflected in surplus of current account for last two quarters of FY23, it said.

Pertaining to inflation, the ministry is of the view that the inflation for the month of July 2023 is expected to remain in the range of 25%-27% owing to the recent decrease in administered prices of petrol and diesel which has transmitted into lower domestic prices of essential items by impacting the transportation cost.

Moreover, the declining international commodity prices are expected to offset the inflation spikes that emerged due to domestic supply shocks.

The benchmark index of international food commodity prices declined again in June 2023 led by price decreases for major cereals and most types of vegetable oils. The timely measures taken by the government to boost the agriculture sector (Kissan Package) would result in a better crop outlook and smoothen domestic supplies.

Moreover, the expected political stability and stable exchange rate would help to achieve price stability.

In its final remarks, the report noted that the government succeeded in ensuring the sustainability of the external and fiscal sectors through various tough decisions and stabilization measures.

In FY24, the government is gearing towards achieving higher growth of 3.5% through various measures like the Kissan package, industrial support, export promotion, encouragement of the IT sector, resource mobilization, etc.

“To achieve higher and sustainable economic growth, it will require prudent and effective economic decisions, political and economic certainty, and continuation of friendly economic policies along with enough foreign exchange financing,” the report emphasized.

The recent IMF approval of the Stand-By Arrangement and other bilateral and multilateral inflows will pave the way to further improve the macroeconomic environment and the confidence of economic agents, it further said.

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