ISLAMABAD: The country’s exports shrank for the fifth month in a row dropping by 15.42 per cent year-on-year to $2.21 billion in January raising fears about the closure of industrial units especially textile and clothing across the country.
On a month-on-month basis, export proceeds decreased by 4.41pc in January, official data showed on Thursday.
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.
In the first seven months (July to January) of 2022-23, exports were down 7.16pc at $16.46bn compared to $17.74bn in the corresponding period last year. The drop shows the government would find it difficult to achieve the export target this fiscal year.
Industrialist and exporter Jawed Bilwani told Dawn from Karachi that production in most of the factories reduced between 30pc to 50pc. He said small units have completely halt their operations owing to rising cost.
Mr Bilwani further said that the real impact of falling production will be visible in the export figures for March and April. He also blamed that the tax department for withholding due refunds of exporters.
As part of the negotiations with the IMF, the government is also mulling to discontinue power subsidy and impose sales tax on raw materials for the export sector, especially textile industry. “We have already conveyed to the government impact of these measures on exports,” he said.
In contrast, imports dipped 19.55pc to $4.85bn in January compared to $6.03bn over the corresponding month of last year. In seven months, the imports fell 22.53pc to $36.10bn this year from $46.59bn over the corresponding period last year.
Between July and January FY23, trade deficit decelerated 31.97pc to $19.63bn from $28.86bn over the corresponding months of last year.
In January trade deficit fell 22.71pc to $2.64bn on a year-on-year basis.
Exporters believe that one of the main reasons behind falling exports was the exchange rate instability. The discontinuation of duty drawbacks 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 decline in export proceeds. Commerce Minister Naveed Qamar since taking responsibility for the ministry has constantly been on foreign tours. In the previous fiscal year (2021-22), Pakistan not only achieved its export target but also exceeded the psychological barrier of $30bn, as proceeds rose 26.6pc to $31.85bn from $25.16bn a year earlier.
However, the import bill also jumped 43pc to cross $80bn in 2021-22, up from $56.12bn a year ago.
Published in Dawn, February 3rd, 2023
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