KARACHI: The services trade deficit shrunk by 38.26 percent in the first nine months of current financial year due to strong growth in its export and falling imports.

The trade deficit in services totaled $2.592 billion in July-March of 2008-09 over $4.782 billion in the corresponding period of last year, Federal Board of Statistics reported on Wednesday.

The reduction in services trade deficit has been encouraging for economic outlook of the country at a time when goods trade deficit also went down.

The export of services sector registered 10.50 percent growth to $2.663 billion during the months under review over $2.383 billion in the same period of previous year.

Imports fell 22.04 percent to $5.586 billion in the said period against $7.166 billion in the same months of previous year.

In the month of March, the deficit reduction was even much higher by 59.67 percent as it touched $236 million compared with $586 in the month of March last year and was 6.31 percent down against the preceding month of March of current fiscal. Total services export in March, however, fell 19.29 percent to $250 million against $310 million in the same month of last year and imports decreased 45.70 percent to $486 million over $896 million in the last year.

The service sector comprises government services, travel services, transportation services, financial services, communication services, construction services, computer and information services, royalties and licenses. Despite having enormous potential, the growth and development of services sector in Pakistan has been quite negligible.

It is perceived as supplement to the exports in the goods sector. Lack of knowledge about the international regime on services export, capacity constraints, inadequate networking, poor marketing and politico administrative environment are the major factors for underperformance in this very important area of the economy.

Government is currently working on the project to boost the export and for the purpose a special cell has been created in Trade Development Authority of Pakistan (TDAP). TDAP initially identified five high potential sectors including construction and architecture, health and medical, legal and accountancy, information technology and financial services including banking, insurance and financial management.

The world market services valued more than $3 trillion in 1998 and believed to reach 50 percent of the world trade by 2020.