Macroeconomic Forecast Pakistan

Pakistan recorded a slightly wider goods trade deficit in January, with the balance inching up to US$1.3bn from US$1.2bn in the previous month. On a year-on-year basis, the country's trade deficit widened by 70.0%. Although upside pressure on the deficit has eased to a certain extent (the monthly deficit peaked at US$1.6bn in September 2011), it will likely remain elevated given the ongoing weakness of export growth and the relative stubbornness of import growth. With the cumulative trade deficit for the first seven months of FY2011/12 (July-June) at US$9.1bn, the latest data poses upside risk on our end-FY2011/12 trade deficit forecast of US$13.8bn.

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