Trade deficit continues to narrow as exports accelerate

The trade deficit for the first four months of the 2018-19 fiscal year, which starts in October and ends in September, has declined with imports increasing at a slower pace compared to the same period of last fiscal year.

According to data provided by the Ministry of Commerce, trade volume for the period up to the second week of February reached US$12.65 billion, a gain of US$634 million compared to the same period of last fiscal year. Exports stood at US$5.9 billion while imports dropped by US$280 million to US$6.8 billion.

A breakdown of imports showed that industrial raw materials led the drop with a decline of US$150 million, while consumer goods came in second with a fall of US$110 million.

Separately, the country’s garment exports rose by US$187 million to US$885 million compared to the same period of last year.

The export of farming products contributed US$1.2 billion while animal products exports stood at approximately US$250 million, earning US$223 million more than in the same period of the last fiscal year.

The mining sector contributed US$340 million to exports, a drop of US$280 million compared to the same period with forestry products contributing another US$68 million. Industrial finished products contributed US$3.37 billion to exports, a gain of US$920 million while other products exports declined by US$296 million to US$300 million.

Ministry assistant secretary U Khin Maung Lwin said the government is targeting a total trade of US$31 billion for the current fiscal year, with US$15.3 billion for exports and US$15.8 billion for imports.

This would reduce the trade deficit to US$500 million. “Trade deficit seems to be reduced. It is likely to exceed the target,” he said.

According to the ministry’s data, total trade stood at US$33.53 billion in the previous fiscal year, with exports at US$14.85 billion and imports at US$18.69 billion. Trade deficit for the 2017-18 fiscal year stood at US$3.84 billion.

Myanmar exports items from seven major commodity groups. These include manufactured goods consisting mainly of garments, as well as agriculture produce, minerals, cattle, fisheries and forestry products.

In comparison, Myanmar’s major import items are divided into four groups — capital goods, intermediate goods, consumer goods and cut-make-pack garment products.

On one hand, the higher volume of exports reflects the government’s efforts to reduce the trade deficit by screening luxury imports, encouraging import substitutes and boosting exports.

They also come at a time when foreign direct investments into the country have eased over the past year, according to official data. Myanmar’s current account deficit, which includes the trade deficit, is financed mainly by foreign direct investments into the country.

On the other hand, the fall in imports of capital goods also reflects less demand and activity in the industrial and construction sectors, implying a slowdown in the broader economy, the World Bank said in its 2018 Myanmar report.

Source: Myanmar Times

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