Pakistan’s exports have plunged to a four-year low of $23.9 billion in the recently ended financial year - missing the target by $3.1 billion and tattering the much-trumpeted ‘Vision 2025’ that promises six times increase in exports in the next 10 years.
The country exported goods worth $23.9 billion during the last financial year 2014-15, which were $1.3 billion or 4.9% less than the previous fiscal year, reported the Pakistan Bureau of Statistics (PBS) on Thursday.
It was a poorer performance compared to Pakistan Peoples Party’s (PPP) last year in office, which is generally considered as a bad year in terms of economic policies and governance. In the last year of the PPP government, the exports had increased to $24.5 billon.
It was also the lowest number since 2011-12 when the country had exported goods worth $23.6 billion.
The country’s exports are falling at a time when its regional peers are increasing their shares in global trade. Pakistan’s exports amount to only 0.15% of the global receipts from exports.
While the exports dropped by almost 5%, the imports in the same period grew on an average of 2.1% to $46 billion, widening the trade deficit by 10.7%.
For the last fiscal year, the government had targeted to increase the exports to $27 billion -a mark that it missed by a margin of $3.1 billion. The imports also exceeded the target by $1.9 billion. Resultantly, the gap between imports and exports stood at $22.2 billion, which was $5.2 billion higher than the official estimates.
Read: Textile sector: Identifying causes for low exports
This would have a direct bearing on the official foreign currency reserves, which remained far below the IMF’s projections of $15.4 billion for the last fiscal year. The foreign currency reserves held by the central bank stood at $13.5 billion by end of the last fiscal year, almost $2 billion less than the IMF’s projections.
Decrease in international prices of commodities, increase in cost of production due to increase in energy and other input costs, energy crisis and lack of research and development have impeded growth in exports, admitted the Ministry of Finance in its latest publication, the Economic Survey of Pakistan 2014-15.
Since assuming office in June 2013, the incumbent government has slapped Rs830 billion additional taxes and most of these taxes are regressive, making exports uncompetitive in international markets.
All Pakistan Textile Mills Association - the representative body of the exporters - has already announced to shut their factories, as they argue that doing business was no more profitable due to unprecedented level of taxation and high energy prices.
Last year, the PML-N government had launched its economic vision, the ‘Vision 2025’, which promises to address all the obstacles, which are pulling back economic growth. One of the important targets of the ten-year plan is increasing the exports to $150 billion.
In the last fiscal year, the exports had to be increased to $37.5 billion to achieve the overarching goal, which it missed by a margin of $13.6 billion. The trend is going to continue.
The latest projections of the International Monetary Fund show that the new fiscal year 2015-16 will be as bad as the last fiscal year in terms of growth in exports.
Read: Both India and Pakistan need to ease trade restrictions
Although the government has projected the exports to grow to $25.5 billion by end of this year, the IMF estimates show that export receipts will marginally increase to $24.5 billion. Similarly, the IMF has portrayed a negative growth in imports and has estimated that the imports will remain around $40 billion this year.
The local industry is highly dependent on imported raw material and negative growth in imports will also have adverse implications on overall industrial growth.
The yearly trade figures also portray almost similar trends. In June alone, the trade deficit widened 3.4% to $2.4 billion, according to the PBS. The exports remained at almost last year’s level of $2 billion, showing a marginal contraction of 0.1%. The imports in last month increased to $4.4 billion - higher by 1.8% over imports in the same month of last year.
On a monthly basis, the trade deficit in June widened by 25.5% over May due to 3.2% expansion in exports and 14.2% increase in imports, data from the PBS showed.
Published in The Express Tribune, July 17th, 2015.
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