March 10, 2006	Friday	Safar 9, 1427

KARACHI, March 9: Pakistan’s international trade structure in the current fiscal year has started showing interesting features — both negative and positive — on the import side as well as on the export side, warranting an official review and close scrutiny by the government agencies and the trade bodies.

Official trade figures for seven months (July-Jan) 2005-06 are available, while a market-wise analysis for four months of exports from July to October 2005 has been carried out. In the overall trade, the disturbing trend is a phenomenal growth of more than 50 per cent in the import bill, which has enlarged country’s trade imbalance to about $6.5 billion. As the indications are, the trade imbalance is likely to swell to $11 to 12 billion in the final counts in June 2006. It can wipe out the bulk of the much trumpeted foreign exchange reserves gathered and accumulated from the September 9, 2001 spoils.

On the positive side, an analysis of exports in the first four months of the current fiscal year, shows the consolidation of Pakistan’s position in the conventional markets of the EU and the USA. At the same time, exports have shown a healthy market diversification trends and exporters are creating a good space in the emerging markets of Asia, Africa, South America, East Europe and some other places.

In first four months, Pakistan’s exports increased by more than 43 per cent to East Europe, 35 per cent to Asian countries, over 19 per cent to the Middle East and Africa each, 26.73 per cent to the American region and 9.47 per cent to the EU countries.

It is understood that the East European countries, now a part of the EU, are being monitored separately by the officials in data collection and analysis.

In the North American region, Pakistan’s exports, during July-October 2005 period, have increased by a hefty 26.73 per cent to about $1.65 billion.

Pakistan’s exports to the American region have shown a steady growth from $3 billion in the year 2002-03 to $3.33 billion in 2003-04 and $3.90 billion in the outgoing fiscal 2004-05. Officials and exporters are confident of exceeding $4 billion milestone in the current fiscal year.

The USA remains the single largest trade partner of Pakistan in the American hemisphere. In the first four months of the current fiscal Pakistan’s exports to the USA are worth $1.77 billion almost, 90 per cent of the exports to the American region.

What should worry the export planners is the setting of a declining trend in Mexico in the current fiscal year. Mexico showed for last three years a growth trend but in the first four months Pakistan’s exports are down by about three per cent.

Canada is another potential market with a good number of Pakistanis and South Asians, where exports are virtually, stagnated at $200 million. In the first four months the exports were worth $77 million demanding attention of the planners and a new market strategy by the exporters.

With more than 30 countries Central America also appears to be beyond the reach of Pakistani exporters where hardly $70 million of goods are exported. South America includes big countries like Argentina, Brazil, and Venezuela. About 16 countries of South America absorb hardly about $134 million worth of Pakistan’s exports in a year.

In first four months total exports to these countries were worth $54 million. Obviously, the marketing work, done at the highest level by President Musharraf during his visit to Mexico, Brazil and Argentina about a year ago, is not being followed up either by the commerce ministry, Export Promotion Bureau and the trade bodies.

While, the overall exports in seven months (July to Jan) amounts to $9.30 billion, showing a growth of over 21 per cent, the exports in the month of January amounting to $1.23 billion, is lower than the official target of $1.4 billion.

A bulging import bill of $15.8 billion in the seven months must be a matter of concern for the finance and commerce ministries, the State Bank of Pakistan and the leaders of trade and industry. Sooner or later, the growing trade imbalance and rising current account deficit, coupled with growing inflation, is bound to impact Pakistan’s exchange value putting it back in the vicious whirlpool of debt repayments and more debt.

An unlimited demand for consumer goods and the government policy of supporting auto importers and auto assemblers with bank loans, has pushed up import bill by over $2.5 billion. Add to this the import of $3.50 billion worth of petroleum mainly, because of rising demands for more and more vehicles coming on roads, is the other factor. Domestic appliances related imports are not mentioned in the import bill.

The consumers’ items import bill is now well over $974 million in the first seven months and is expected to go beyond $1.5 billion as sugar, wheat, pulses and popular brands of cheese, butter, honey, beverages and juices and a large variety of items are being imported for a new class of filthy-rich consumers, that have emerged in last six years.