ISLAMABAD: Exports grew by 4.6 per cent during the first quarter of the current fiscal year despite government’s efforts to bring double-digit growth, according to data released by the Pakistan Bureau of Statistics on Wednesday.
The paltry growth in export proceeds will hurt government’s efforts to ease difficulties on the external front.
In rupee terms, export proceeds rose 23.12pc in the first three months of the current fiscal year, owing to substantial depreciation in the exchange rate since last year.
State Bank of Pakistan has devalued the rupee by approximately 10pc in the first week of September. In the open currency market, dollar is currently trading at around Rs138. Since December last year, the rupee has lost of its value 30 pc against the greenback.
Export proceeds during the period – July to September – rose to $5.4 billion from $5.2bn over the corresponding months of last year.
However, export proceeds posted a nominal growth of 3.55pc month-on-month in September as it reached to $1.73bn from $1.66bn over the corresponding month of last year.
On the other hand, growth in import and trade deficit slowed with the latter declining by 1.61pc to $8.87bn in the first quarter versus $9.01bn from same period last year.
In the first quarter, import grew by a nominal 0.63pc to $14.26bn from $14.17bn the year before. However, on monthly basis, the import bill fell by 0.18pc year-on-year to $4.43bn.
The data suggests that the slowing trade deficit might have hit a low peak this year. If subsequent months show similar tepid growth in the trade deficit, the new government’s fortunes on external sector could see a turnaround.
The tepid growth in exports comes despite Rs32bn cash support during the last 18 months to the textile and clothing exporters under a special prime minister package and policy for the sector.
Pakistan’s trade deficit rose to an all-time high of $37.6bn during the FY2017-18 increasing by 15.8pc from the FY2016-17.
The present government since taking charge in August has been vocal to overcome the rising import bill and current account deficit which reached to alarming high level of $18.5bn last year.
After exhausting all available forums, the government finally decided to seek bailout package from the International Monetary Fund.
Exports and remittances are two of the key foreign contributors to country’s foreign exchange reserves. Depleting reserves — enough to cover one and a half month worth of imports — are at the heart of the immediate economic challenge troubling the incumbent government. The depletion has been a result of galloping trade deficit.
Pakistan’s external sector indicators have begun to recover as seen during the first quarter of current fiscal year visible in the 13.45pc jump in remittances coupled with the flattening trade deficit and imports.
Published in Dawn, October 11th, 2018