Pakistan Bureau of Statistics (PBS) released the trade breakup for Jun’20. During the month of Jun’20, exports and Imports both surged by 15% M/M and 30% M/M, respectively.
Trade breakup reveals that growth in monthly exports was mainly driven by recovery in textile exports by 28% M/M whereas, the surge in imports came mainly on account of 88% M/M rise in import of petroleum product. Moreover, Food and Machinery imports also contributed towards the increase in overall imports, growing by 24% M/M and 31% M/M, respectively.
Textile exports soared mainly because of pent up demand as lockdown measures began easing at key export destinations. Presently, most of the textile factories are operating at full capacity and hence, the current level of exports can be considered sustainable.
Petroleum Imports elevated by 88% MoM likely due to a low base effect in May20. Note that on account of a pricing discrepancy between domestic petroleum and its imported counterpart, several stakeholders within the energy chain withheld their petroleum purchases to avoid potential losses. Moreover, demand of petroleum goods also grew during Jun20 likely due to easing lockdowns aiding economic recovery.
Overall, trade balance for Jun’20 is at relatively manageable levels and coupled with surge in remittances for Jun’20, there is a possibility that current account remains in surplus for month of Jun’20.