10MFY14: Govt likely to miss export target, PBS data shows

Exports fall 14.5% in April compared to March.

ISLAMABAD:

The government is likely to miss this year’s export target as the country’s total exports in the first 10 months of this fiscal year grew just by 4.3% to about $21 billion, falling short of official and International Monetary Fund’s (IMF) projections.

The figures released by the Pakistan Bureau of Statistics (PBS) on Friday showed that the total exports during the July-April period stood at $20.99 billion – higher by a mere $854 million or 4.3% over the comparative period of the previous year.

For the current fiscal year, the government has targeted to increase exports to $26.6 billion, the target is expected to be missed by a margin of at least $1.5 billion. On an average, Pakistan is earning $2.1 billion a month by exporting goods.

After missing this year’s economic growth target, this will be the second most important economic indicator that is likely to remain below official estimates.

The imports also grew slower than official and IMF’s estimates, clocking in at $37.1 billion — a 1.2% growth or up by $440 million. It helped curtail the trade deficit to $16.1 billion in the first 10 months, according to the PBS. The 10-month deficit was 2.5% less than the one posted in the corresponding period of the previous year.

However, the $16.1-billion deficit was close to an annual trade deficit of a projection of $16.7 billion. An excessive trade deficit will eat up the official foreign currency reserves that have started building up on the back of foreign borrowings.

The Federal Board of Revenue (FBR) is also feeling the heat of slowing imports, as FBR Chairman Tariq Bajwa claimed that due to appreciation of rupee and decline in dutiable imports, the FBR’s revenues will be hurt by Rs70 billion.

The IMF has worked out this year’s financial requirements for Pakistan on the basis of a smaller trade deficit. The Fund has estimated a $16.5-billion trade deficit for the current fiscal year and projected $26.9 billion in exports and $43.6-billion in imports.

On the basis of these estimates, the IMF had assessed Pakistan’s external financing requirements at $7.7 billion, while asking the government to raise its official foreign exchange reserves to $9.4 billion.

On a month-on-month basis, the exports drastically shrunk by 14.5% to just $1.9 billion in April over March. Exports in April were $324 million less than March’s export bill. Contrary to contraction in exports, the imports in April grew 12% to $4.1 billion, resulting in a trade deficit of $2.2 billion. The monthly trade deficit was 54.7% higher than the one posted in March.

On a yearly basis, the trade deficit recorded at $2.2 billion in April over a year ago. It was higher by 20.8% or $370 million over the same month of the last year, said the PBS.

Published in The Express Tribune, May 17^th, 2014.

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