KARACHI: The trade deficit in the first three months of the current fiscal year widened substantially to $7 billion as against $5.5 billion in the previous fiscal year.

According to the Pakistan Bureau of Statistics, trade deficit in July-September widened by almost 29 per cent.

During the quarter (July–September 2016) exports of the country have fallen by nine per cent to $4.68 billion as compared with $5.14 billion in the corresponding quarter of the last fiscal year. The imports of country, however, increased by 10.7 per cent to $11.74 billion from 10.61 billion.

According to a report by the International Monetary Fund (IMF), Pakistan’s exports fell by 8.6 per cent during the fiscal year ended June 30, 2016, reflecting lower international prices of cotton and rice, a weak business climate, and competitiveness losses from an appreciating real exchange rate.

IMF further said the lower growth in advanced countries, such as in the UK and possibly the EU owing to the prospective Brexit, and in emerging market economies (including China and GCC) could weaken exports, remittances and foreign direct investment.

Continued appreciation of the real effective exchange rate, in the context of an appreciating USD vis-a-vis the pound and euro, would further erode export competitiveness and affect remittances.

Tighter global financial conditions could have an adverse impact on capital inflows. By contrast, lower oil prices and a slower pace of increase in international interest rates, owing to the impact of Brexit on advanced economy growth, would be beneficial for Pakistan’s external position and growth.