RECORDER REPORT
KARACHI: Followed by the higher imports, the country’s services trade posted a $2.6 billion deficit, widening by 69 per cent, during the last fiscal year 2013-2014 (FY14).
The latest statistics released by the State Bank of Pakistan (SBP) revealed that Pakistan’s services trade performance continues to deteriorate mainly due to higher imports and decline in exports. Although, imports during the last fiscal year are lower than those of the previous year, however, still higher than exports, which also posted a decline of 22 per cent end of June.
Economists said that higher services trade deficit is directly hurting the current account deficit and some lasting steps are required to curtail the higher services trade deficit.
During the last fiscal year, the country’s service trade presented an improved picture supported by the release of Coalition Support Fund (CSF) payments. Although the country has also received some inflows under the CSF during FY14, however, despite that services sector has not performed well.
Economists believed that high payments on account of the government service, transportation, travel and information technology are responsible for a massive increase in services trade deficit.
According to the State Bank, the services trade deficit surged by 69 per cent or $1.07 billion to $2.64 billion in FY14 with $5.261 billion exports and $7.903 billion compared to a deficit of $1.564 billion in the same period of FY13.
Exports and imports of services trade posted a declining trend and reduced by 22 per cent and 5 per cent respectively.
Services trade exports stood at $5.261 billion during July-June of FY14 as against $6.724 billion in corresponding period of the FY13, depicting an increase of $1.463 billion. Imports declined by $385 million to $7.903 billion in the FY down from $8.288 billion in FY13.
The country’s service export inflows comprise $1.902 billion on account of the government services, $1.265 billion on account of transportation services, $285 million from travel, $817 million from telecommunication, $30 million from construction services, $86 million through financial services, $89 million from insurance sector and some $760 million on account of other business services during the FY14.
While transportation payments stood at $3.811 million, travel $1059 million, telecommunication $348 million, construction $41 million, insurance $222 million, financial sector $193 million and payment of other business services stood at $1.486 million during the period under review. It may be mentioned here the services sector contributes over 50 per cent to GDP.
