Macroeconomic Forecast Pakistan

In line with our core view, the latest trade data (for September) showed further widening of Pakistan's deficit. While the US$1.5bn deficit remained largely unchanged from the previous month, it represents a massive widening from the US$0.6bn deficit recorded in September of last year. Export growth continues to slow, hitting a 14-month low of 6.6% y-o-y, down from 17.7% in August. Meanwhile, import growth (at 42.0% y-o-y in September) has remained robust, outpacing export growth over the past two months. September's trade figures pose upside risk to our end-FY2011/12 (July-June) deficit projection of US$12.3bn, a 19.6% widening from the US$10.3bn recorded in FY2010/11.

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