KARACHI, Dec 15: Pakistan's international trade is showing disturbing trends in the last three months - September, October and November - as exports are on decline and imports are showing a constant upward growth
resulting in a yawning trade gap of over $2.5 billion in last five months.
Import bill is rising because of 38 per cent increase in petroleum imports, about 41 per cent rise in fertilizer, pesticides and chemicals cost, 37 per cent increase in food import mainly wheat, 23 per cent rise in machinery and equipment imports and 78 per cent rise in metals import. It has contributed to the growing trade imbalance in last five months.
The growing trade imbalance is putting a severe strain on the current accounts balance and on the foreign exchange reserves. The State Bank has financed the bulk of $943.55 million on petroleum products from the foreign exchange reserves. Oil import bill is up almost 38 per cent in last five months.
But fertilizer import and insecticides have claimed more than 41 per cent of foreign exchange in last five months of the current fiscal year. This year the total bill of fertilizer, pesticide and chemicals is over $908 million. Machinery imports have claimed $922.28 million, food bill $309.77 million and metal group $234.63 million.
In five months, about $700 million have been taken from the official foreign exchange reserve to finance petroleum import while over $7 billion from the inter-bank or open market.
In exports, the downward trend set in during September when they stood at $1.12 billion as against $1.14 billion. The drop in exports was more pronounced in October when they stood at $993 million and finally in November the exports came down to $897 million.
Because of the robust growth in exports during the first month of the current fiscal in July and then a small growth of over 5 per cent in August the total proceeds during July to November 2004'are still maintaining an upward growth of over 11 per cent as compared to five months export proceeds of 2003. But in last five months, except for cotton, yarn, fabrics and readymade garments, a very large number of products in textiles and other sectors are showing an alarmingly declining trend.
The Federal Commerce Minister Humayun Akhtar, however, remains an optimist in this otherwise dismal scenario. In his press conference at the Export Promotion Bureau last Saturday the minister was confident that exports would pick up from January onward when textile export quota regime would give way to open market in the US and Europe.
Official planners projected $9 billion exports from the textile and garments category in the current fiscal year. Out of this total export of textile products in last five months is $3.37 billion, which is $163 million less than the proportionate target.
Exporters have to fetch $5.6 billion in next seven months. It means that textile exporters have to realise at least $800 million every month in next seven months to achieve the target.
Actual export of $5.37 billion in last five months is $50 million behind the proportionate target. Exporters have to fetch $8.33 million dollars or about 1.19 billion dollars every month.
Decline in exports during November is being attributed to week-long Eid holidays, Ramzan fasting and an abrupt embargo on seven textile export quota categories for the US.
