Exports have started growing. Remittances are up. And, inflows of foreign investment are getting thicker. The external sector outlook is better now than at the end of the preceding fiscal year.

Concerns remain, however. Uncertainty about forex flows from the US mingled with fears of all kinds: swelling import bills, huge foreign debt servicing and, last but not the least, accelerated outward repatriation of funds by foreigners and multinational corporations working in Pakistan.

Export earnings in July-August rose 11.8 per cent to $3.497 billion from $3.128bn a year ago. Detailed statistics for August have yet to be released, but it is safe to assume that the rise in July-August exports would be broad-based keeping in view the trend seen in July.

Even textile exports for July-August might show signs of a rebound, officials of the Trade Development Authority of Pakistan (TDAP) say, adding that these exports recorded a modest rise in July while August shipments continued to depict a rising trend.

After Shahid Khaqan Abbasi took office as the new prime minister, export-oriented industries heaved a sigh of relief and now seem to be working with renewed vigour.

Before that, the political uncertainty that prevailed in the country led to suspension of routine work at the federal minister’s level and made exporters nervous.

Export earnings rose 11.8 per cent year-on-year to $3.497 billion in the first two months of the current fiscal year

This, too, along with some known structural issues like disrupted energy supply, high cost of doing business, lack of product innovation and insufficient value addition in export products, were taking a toll on exports. With political uncertainty easing, exporters are now focusing on business. The recent rise in exports is seemingly a result of this plus along with the relief provided in energy supply.

Officials of TDAP point out export earnings started rising from the third quarter of FY17 and continued in the fourth quarter as well. But this fact is often ignored as overall exports in the previous fiscal year fell slightly (1.63pc) to $20.448bn from $20.787bn a year ago.

“If you want a reason to be optimistic, look at export earnings on a calendar-year basis,” one of these officials insisted, quoting official data from the Pakistan Bureau of Statistics which revealed that January-August exports showed a rising trend in six out of the eight months.

“We saw a declining trend only in February and then in May when goods transporters went on a 10-day strike and the PTI were holding public rallies in big cities against the government.”

Just like exports, remittances sent back home by overseas Pakistanis also saw a rising trend in July-August. And this trend came towards the end of the last fiscal year — a fact that was not highlighted very much as overall remittances in FY17 fell 3pc year-on-year to around $19.304bn, according to SBP data.

In July-August, remittances rose 3.2pc to $3.496bn from $3.089bn in the year-ago period. Bankers link it to improved system for handling remittances’ flow and the facility of online delivery of remittances to their beneficiaries in Pakistan.

They also cite stricter measures taken to curb inflow of remittances through unofficial channels as a key factor. But these factors had been in place well before the beginning of this fiscal year.

Increase in remittances from the GCC region is, perhaps, more due to firm oil prices and improvement in host economies of overseas Pakistanis in that region.

“But rise in remittances from GCC countries is also attributable to the fact that investment in the real estate market of the UAE by Pakistanis living in that region has slowed down and many of them are now investing funds in avenues of investment available in Pakistan, including the real estate,” says a senior executive of a local bank.

Besides the increase in remittances in August is also a reflection of larger forex inflows from overseas Pakistanis to their families for sacrificing of animals as Eidul Azha fell on Sept 1-3 this year.

Net foreign direct investment that went up in FY17 to $2.4bn from $2.3bn in FY16 also showed a big jump in the first month of FY18. In July this year, net FDI surged to about $223 million from around $85m in July last year.

FDI data for July-August would be out by the time this write-up is published. Officials of the Ministry of Finance anticipate continuation of the rising trend pinning their hopes on CPEC-related funds in the pipeline.

Meanwhile, the inclusion of five additional Pakistani stocks on FTSE Asia-Pacific ex-Japan index from this month is expected to reinvigorate foreign investors’ interest in our stock market.

That, along with the easing of political uncertainty in Pakistan, may brighten the outlook for our foreign portfolio investment that remained negative in the past two years after witnessing a net inflow of $917m in FY15, stockbrokers say.

Published in Dawn, The Business and Finance Weekly, September 18th, 2017