ISLAMABAD: For the eighth month in a row, Pakistan’s merchandise exports shrank by 26.68 per cent year-on-year to $2.12 billion in April, data released by the Pakistan Bureau of Statistics showed on Tuesday.

In the first 10 months (July to April) of 2022-23, exports were down 11.71pc at $23.17bn compared to $26.24bn in the corresponding period last year.

The export proceeds are declining mainly because of internal and external factors raising fears about the closure of industrial units, especially textile and clothing.

At the same time, imports plunged by 55.67pc to $2.95bn in April compared to $6.66bn in the corresponding month last year. Imports fell 28.44pc to $46.88bn during July-April from $65.51bn over the corresponding period last year.

Between July and April FY23, the trade deficit decelerated by 39.62pc to $23.71bn from $39.27bn over the corresponding months of last year. In April, the trade deficit fell 77.98pc to $0.829bn on a year-on-year basis.

Trade deficit decelerates to $23.71bn in first 10 months

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.

The drop in textile and clothing, which constitutes more than 60pc of total exports, shows the government would find it difficult to achieve the export target this fiscal year.

Textile exports were declining due to the federal government’s lack of strategy and inability to prioritise effectively, said the exporters.

They further said the root causes of the export decline include working capital shortages and liquidity crunch as refunds such as sales tax, deferred sales tax, income tax, drawbacks of local taxes and levies, technology upgradation fund, and duty drawback are being delayed.

It was highlighted that the faster refund system is not functioning as intended, with refunds now taking 3-5 months to process instead of the promised 72 hours. Additionally, the sector is facing a substantial increase in financial and energy costs, the exporters further lamented.

Published in Dawn, May 3rd, 2023