Pakistan’s exports remained almost flat at $7.5 billion in the first four months of current fiscal year and the trade deficit narrowed due to a dip in imports, denying the government’s claim of bringing a major improvement in exports in the post-Covid situation.
The official trade figures released by the Ministry of Commerce on Tuesday showed business as usual, which was contrary to the claim made by Prime Minister Imran Khan in his presser the same day.
“During July-October 2020, the exports decreased only marginally by 0.1% and stood at $7.54 billion as compared to $7.55 billion during the same period of last year,” according to a Ministry of Commerce statement. The statement was issued after a briefing to Adviser to Prime Minister on Commerce Abdul Razak Dawood on the latest export trend.
“I am happy that Pakistan’s exports grew at the fastest pace in the subcontinent in the post-corona situation,” said Prime Minister Imran Khan, while announcing a reduction in electricity rates for the industrial sector.
India’s exports in October alone stood at $24.8 billion - more than Pakistan’s annual exports. Indian exports decreased 5.4% on an annual basis in the month.
However, official figures of the Ministry of Commerce actually revealed a reduction of $7 million in exports during the July-October period.
Imports during the July-October period decreased 2.3% or $359 million to $15 billion, providing relief to the government that failed to enhance exports. As a result, the balance of trade recorded a decline of 4.5% to $7.4 billion as compared to $7.8 billion last year.
The contraction in imports also indicated that Pakistan’s economy was not growing at a healthy rate, which affirmed the apprehension expressed by the Ministry of Finance in its latest monthly economic outlook.
The ministry stated that the resurgence in coronavirus cases posed a challenge to the economic outlook and the economic turnaround could be slower than expected.
Exports remain one of the areas where the Pakistan Tehreek-e-Insaf (PTI) government has been struggling to make improvement. A marginal improvement in exports in absolute terms often gives impression of a major boost in terms of percentage due to a very low export base.
Pakistan’s exports have long remained around $2 billion a month and the trend did not change despite 39% currency devaluation by the PTI government in the past two years. The government has already missed the annual export target in its first two years. For the current fiscal year, the government has set the export target at $27.7 billion, which will require only 6.2% growth, and it should not be an uphill task.
However, exports in the first four months were equal to only 27% of the annual target. Imports in the current fiscal year are projected to contract 4.8% to $42.4 billion. But imports in the first four months were equal to about 36% of the annual target.
On an annual basis, the trade deficit in October 2020 compared to the same month a year ago shrank 22.6% from $2.1 billion to $1.6 billion, thanks to a steep decline in imports.
In absolute terms, there was a reduction of $463 million in the trade deficit on an annual basis.
In October 2020, the imports slipped to $3.7 billion compared to $4.1 billion in the same month of last year, which reflected a decrease of 10.3% or $421 million. Exports increased but only by 2.1% to $2.1 billion in October, a net increase of $42 million.
The adviser to prime minister on commerce even felt proud over the meagre $42 million increase in exports.
“The commerce adviser expressed his satisfaction at the export trend and praised Pakistan’s exporters who made it possible to bring exports to pre-Covid-19 levels despite uncertainty and contraction in Pakistan’s major markets,” said the commerce ministry.
On a month-on-month basis, exports grew 10.5% in October over September this year. There was an increase of $196 million in export receipts as compared to the preceding month. But total monthly exports were only $2.1 billion.
Imports posted a contraction of 15% and stood at $3.7 billion last month. There was a contraction of $647 million in imports within a month.
As a result, the trade deficit shrank 34.7% or $843 million in October over September.
The commerce ministry stated that during July-October 2020, the increase in exports was mostly in the value added sectors. It further stated that as compared to the same period of last year, the decrease in exports during July-October 2020 was seen in mostly the non-value added sectors. The adviser was also informed that as compared to the same period of last year, Pakistan’s top five growing markets during July-October 2020 were Indonesia, Qatar, Denmark, South Korea and Afghanistan.
Published in The Express Tribune, November 4th, 2020.
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