KARACHI, March 27: Despite moderate to impressive increases in quantity of goods, export earnings have suffered a massive loss of nearly $900 million during 18 months ending December 2001 due to fall in unit prices.

Officials say that the quantity and price effect on exports is calculated on the basis of detailed data available on 27 items, covering 78.8 per cent of the total exports.

In the first half of fiscal 2002, the second SBP quarterly report says, the deterioration in unit prices has resulted in an overall loss of $182 million in export earnings. Similarly, falling international prices cost the country $703 million during fiscal 2001.

Industry sources here said that the losses are mainly attributable to the depreciation of the rupee against the dollar. For every dollar, more goods are to be supplied, as the rupee weakens and the goods become cheaper for the importers. The benefits of the falling exchange rate are primarily mopped up by importers and the exporters’ gain is restricted to more rupee earnings against each dollar of foreign sales.

Since the rupee has gained by 6.5 per cent after September 11, the losses on account of fall in unit prices of Pakistani goods are not as huge in first half of current fiscal.

During the 18-month period, the international prices have not dipped as much and Pakistani goods have been made cheaper for foreign buyers on rupee depreciation, says a leading textile industrialist.

The SBP quarterly report reveals that major exports, including POL, readymade garments, towels, tarpaulin and other canvas goods, bedwear, surgical instruments, footwear, cotton fabrics and yarn were able to show moderate to impressive quantitative increases over corresponding period of last year. The total quantity effect for the period amounted to a positive $162 million.

Though the higher textile exports, quantity-wise, contributed to earnings of $209 million, the negative price effect of $175.9 million reduced this gain to just $33.5 million. The price trend was mixed. Prices of cotton yarn, readymade garments and synthetic textiles fell but readymade garments, cotton fabrics and knitwear fetched better prices during the six month under review compared to corresponding period of the last year.

Over the years, Pakistan’s export receipts have been vulnerable on account of narrow base of exportable items, concentrated markets and low value-addition items.

The textile products accounted for 63 per cent of the total revenues and there has now been a qualitative change in favour of high value-added items. Value-added items accounted for 55 per cent of the total cotton and textile manufactures compared to 46 per cent in fiscal 1997.