ISLAMABAD: Pakistan’s exports of merchandise shrank for the sixth month in a row dipping by 18.67 per cent year-on-year to $2.30 billion in February, stoking fears of massive layoffs in the industrial sector.
In the first eight months (July to February) of 2022-23, exports were down 8.65pc at $18.79bn compared to $20.57bn in the corresponding period last year. The drop shows the government would find it difficult to achieve the export target this fiscal year.
Imports dipped 31.51pc to $4.009bn in February compared to $5.85bn over the corresponding month of last year. In the first eight months, the imports fell 23.56pc to $40.09bn this year from $52.45bn over the corresponding period last year.
Between July and February FY23, the trade deficit decelerated 33.18pc to $21.30bn from $31.87bn over the corresponding months of last year.
Trade deficit narrows 33.8pc in first eight months of FY
In February trade deficit fell 43.56pc to $1.70bn on a year-on-year basis.
The export proceeds are declining mainly because of internal and external factors raising fears about the closure of industrial units, especially textile and clothing.
The exports started posting negative growth in the first month of the current fiscal year — July — barring August when a slight increase was recorded because of the backlog of the preceding month. Export contraction is a worrisome factor, which will create problems in balancing the country’s external account.
Pakistan Readymade Garments Manufacturers & Exporters Association ex-chairman Ijaz A. Khokhar told that the government will have to come up with some measures to reverse the industry closure.
He said buyers have withheld their orders mainly because of political and economic uncertainty in the country. Mr Khokhar suggested the government should come up with clear statements to give signals to foreign buyers that their orders will be delivered on time.
“This is a very tough condition”, he said, adding the government will have to support small and medium enterprises. He said a further increase in the interest rate on Thursday will make it almost impossible for SMEs to get access to credit.
The government on Wednesday discontinued subsidised electricity to the export sector. This will further add to the cost of the export sector and will render it uncompetitive on the world markets, especially against its rivals from Bangladesh and Sri Lanka.
Mr Khokhar said buyers are shifting toward Bangladesh, Vietnam and other countries. The government will have to play a role in this uncertainty, he said, adding ministers should give positive messages to international buyers.
Buyers are sceptical about Pakistan’s economy after rating downgrades by the international rating agencies in the past few months.
Exporters believe that one of the main reasons behind falling exports was the exchange rate instability. The discontinuation of duty drawbacks on local taxes and levies by the government has also created liquidity issues for the export sector.
