ISLAMABAD: Pakistan’s export of merchandise has posted negative growth over the past two consecutive months despite payment of cash subsidies and multiple currency depreciation while the government is yet to take corrective measures.
The drop in exports’ proceeds has started since Dec 2019 when it fell by 3.8 per cent while a similar quantum of decline was seen in January 2020, suggested the data released by the Pakistan Bureau of Statistics here on Friday.
No official word was made available by Adviser to the Prime Minister on Commerce Razak Dawood to explain the reason for decline in exports proceeds. The commerce division’s main focus is on negotiating and seeking preferential market access, but it has not been linked with the domestic production line.
The large scale manufacturing sector of the country has already been in negative growth since July 2019 but still the ministry’s focus is on negotiations for international trade agreements and market access. So far none of the preferential treaty has boosted exports from the country after its implementation while the volume of imports has seen double-digit growth afterwards.
The government has yet to finalise the much-awaited industrial and textile policies despite several deadlines.
Contrary to expectations, exports entered negative growth of 3.17pc to $1.97 billion in Jan 2020 as against $2.03bn over the corresponding month last year.
Between July 2019 and Jan 2020, the export proceeds’ growth lowered by 2.14pc as it stood at $13.49bn against $13.21bn over the corresponding months last year.
The numbers are discouraging as exports, which should have grown over the last few months owing to multiple currency depreciation, have failed to pick up.
The government projects exports during the ongoing fiscal to reach $26.187bn, up from $24.656bn in FY2019.
In the 2019-20 budget, the government reduced the cost of raw materials and semi-finished products used in exportable products by exempting them from all customs duties. The government also promised to provide sales tax refund to export sectors.
On the external side, imports are still dropping, which is providing some breathing space despite negative growth in exports from the country.
The country’s trade deficit came down by 28.4pc in the first seven months of the current fiscal from a year ago. The decline is mainly due to a double-digit fall in imports. Another reason is the government’s corrective measures to slow down imports to reduce pressures on foreign exchange reserves and slump in overall demand.
In absolute terms, the trade gap narrowed to $13.75bn in July 2019-Jan 2020 from $19.2bn over the corresponding months last year. On a monthly basis, the deficit fell by 15.03pc to $2.06bn in Jan from $2.43bn during the same month last year.
The Ministry of Commerce estimates that the annual trade deficit may decrease by $12bn to $19bn in the ongoing fiscal from $31bn during the last fiscal.
The data showed that imports in the first seven months of the current fiscal year clocked in at $27.24bn, down by 15.95pc from $32.42bn during the same period last year. The decline in value of imported goods in Jan was 9.63pc to $4.03bn against $4.46bn during the same month last year.
But the trend shows that the quantum of decline in imports is reducing with each passing month. This shows that the imports will stagnate to the tune of around $4bn per month in the next few months.
Published in Dawn, February 8th, 2020