Written as on July 11, 2012
Highlights
• Trade deficit widen to USD21.3bn, missed target of USD14.5bn for FY12
• Workers' remittances crossed historic mark of USD13bn during FY12
In today's Value Seeker, we present an update on trade account and remittances figures for the month of Jun-12 along with the overall details for FY12.
Trade deficit widen to USD21.3bn, missed target of USD14.5bn for FY12
The details of trade account for FY12 stood quite disappointing as it totally missed the budgetary targets breaching to USD21.3bn deficit (9.7% of GDP) compared to the target of USD14.5bn, trade deficit widen up by 36%YoY against FY11 deficit of USD15.6bn. Exports for FY12 went down by 4.7%YoY to USD23.6bn compared to $24.8bn witnessed last year. Whereas, a considerable growth of 11%YoY was witnessed in imports which stood at USD44.9bn during the year against USD40.4bn witnessed a year earlier. These high figures for trade deficit are primarily due to, i) the enormous surged in international oil prices (Arab Light) by 19%YoY during FY12 resulting in swelling of imports as oil imports contains ~34% weightage in the total import bill, ii) huge fertilizer imports amounting ~USD1.1bn (up 112%YoY) during Jul-May 2012, iii) the massive decline in the textile export as cotton prices went down by 35%YoY during FY12 which reduce the export value in USD term of the country iv) and electricity and gas load shedding also denting the export of the country. On monthly basis, the total export of country declined by 0.83%MoM to USD2.1bn during Jun-12 while imports of the country surged by 2.3%MoM resulting to widen the trade deficit to USD1.8bn, up by 6.12%MoM during the same period. Similarly, during Jun-12 trade deficit increased by 27.6%YoY as compared to June-11deficit of USD1.4bn. Whereas export has got down by 11.6%YoY stood at USD2.1bn while imports increased by 3%YoY to USD3.98bn.
Workers' remittances crossed historic mark of USD13bn during FY12
Yet another remarkable year for worker's remittances as Overseas Pakistanis sent USD13bn to Pakistan during FY12 compared to the remittances of USD11.2bn witnessed in FY11, registering a phenomenal growth of 18%YoY. During the month of June-12, worker's remittances stood at USD1.11bn (down by 6.3%MoM while up 1%YoY), workers residing in GCC countries contributed the highest chunk of 60.8% during June-12 (60.9% during FY12), remittances from USA contributed 18.5% during the month (17.5% during FY12) while remittances form European countries contributed 14.1% during the month (14.3% during FY12). However, comparing the monthly averages except for the months of Sept-11 (US$890.42mn) and Nov-11 (US$924.92mn), workers remittances remained above US$1bn each month during remaining 10 months of the year, compared to monthly average of USD933mn registered during FY11
Outlook
Going forward, the declining trend of international oil and commodity prices could potentially result in trade numbers delivering some relief in 1QFY13. Also improvement in Pak US relationship could be a key positive development for re-initiation of CSF program and other civilian and military aid foreign flows which will decrease the pressure on country's external account. Given our major dependency for remittances over GCC economies, we expect this impressive growth in workers' remittances will also continue to embark for FY13 as oil based GCC economies are expected to remain strong. 
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