ISLAMABAD: The downward trend in Pakistan merchandise export proceeds continued for the second consecutive month, raising fears about the closure of industrial units across the country, suggested provisional data of the Pakistan Bureau of Statistics released on Wednesday.

The country’s exports shrank 3.77 per cent in October to $2.37 billion from $2.64bn in the corresponding month last year. On a month-on-month basis, export proceeds decreased by 3.07pc.

The exports started posting negative growth in the first month of the current fiscal year — July — barring August when a slight increase was recorded because of the backlog of the preceding month. Export contraction is a worrisome factor, which will create problems in balancing the country’s external account.

However, the total export proceeds stood at $9.54bn in July-October against $9.46bn in the corresponding period last year, indicating a meagre rise of 0.94pc. The paltry growth shows that it will be difficult in the current fiscal year to achieve the export target.

Pakistan Apparel Forum Chairman Jawed Bilwani from Karachi told Dawn that the main reason behind falling exports was the exchange rate instability. The discontinuation of duty drawback on local taxes and levies by the government has also created liquidity issues for the export sector.

No official statement was issued from the commerce ministry to explain the reasons for the steady decline in export proceeds. Commerce Minister Naveed Qamar since taking responsibility for the ministry has constantly been on foreign tours.

For the first time not only Pakistan achieved its export target but exceeded the psychological barrier of $30bn in FY22. Exports rose by 26.6pc to $31.845bn in the just-ended fiscal year, up from $25.160bn a year ago.

The interruption in gas supply to the export sector and the non-payment of sales tax refunds were other contributory factors, Mr Bilwani said, adding that there is also a reduction in purchasing of goods in Europe and the United States. “The procedural hiccups also led to delays in exports from the country,” he further added.

International Apparel Federal Regional President Ijaz Khokar told Dawn that exports will further drop in the coming months. He further said that textile production has declined in Faisalabad, Lahore and Karachi. Moreover, international buyers also hold their orders, he said, adding the government should implement textile policy in letter and spirit.

He also appealed to the government to notify the drawback amount on exports to a new market as noted under the textile policy. This will help Pakistan to diversify its exports to new markets like Africa and Central Asian States.

Contrary to this, the import bill fell by 27.21pc to $4.63bn in October from $6.36bn in the same month last year. On a month-on-month basis, the import bill declined by 13.30pc.

Trade deficit narrows

The import bill in the first four months (July and October) stood at $21.01bn this year against $25.08bn last year, indicating a decline of 16.21pc.

The import bill increased 43.45pc to $80.51bn during 2021-22, up from $56.12bn a year ago.

As a result of the decline in imports, the trade deficit in October fell by 42pc to $2.26bn this year from $3.90bn over the corresponding month last year. In the first four months, the trade deficit dipped 26.59pc to $11.46bn this year from $15.62bn over the corresponding months of last year.

There are multiple reasons for the decline in exports. Globally retailers are carrying huge inventories as retail sales have suffered due to high inflation.

Pakistan Textile Exporters Association Patron-in-Chief Khurram Mukhtar told Dawn that commodity prices had also started declining in the last few months. Pakistan rupee had a 30pc exchange rate adjustment in the last 8 months, reaching 222 from 170. This led to a decline in the unit price of finished products, he said.

Published in Dawn, November 3rd, 2022