As seen recently, SBP’s latest data revealed that the trade deficit deteriorated sharply during Dec-2020 to US$2,768mn, which is a 50% MoM/64% YoY increase from the previously recorded months.

The increase was largely driven by higher import payments, which jumped by 23% MoM during December. However, on a positive note, the highest increase was seen in the Machinery group (50% MoM) on the back of higher import payments for power and telecom machinery, whereas payments for textile machinery also increased on MoM basis.

Moreover, other categories of imports that witnessed significant increases included transport (higher CKD and CBU imports), textiles (mainly raw cotton imports), and petroleum (higher payments for crude and LNG partly offset by lower payments for POL products).

Although PBS data continues to show a strong improvement in exports (up by 5% YoY in 1HFY21), this has so far not reflected via higher export receipts in SBP data, where the same have shown a 5% YoY decline in the same period.

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