Lahore - As Pakistan’s trade deficit has widened by 32 per cent to $2.683 billion in December, the businessmen on Sunday urged the government to focus on further enhancing exports, because the declining imports have now started picking up, indicating the growing economic activities but signalling the widening of trade deficit too which is not good for the economy. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former President Mian Anjum Nisar, who is also the Businessmen Panel Chairman, stated that Pakistan’s trade deficit widened nearly one-third in December 2020 despite a much-trumpeted increase in export but it was not sufficient to match the surge in imports that jumped to $5 billion. He said that the economic managers were boasting of their performance on the plea of current account balance, increasing to $447 million in Nov 2020 for the fifth month in a row.
He pointed out that to achieve consistency in current account surplus for a long period without compromising industrial growth the government will have to focus on increasing the exports and put the business and trade issues on priority, otherwise, the economic problems and balance of payment could further disturb with the growing trade deficit, he warned.
The chairman of the BMP, the ruling group of the FPCCI, observed that the economic managers will have to chalk out a long term plan for import substitution and increasing exports so that Pakistan becomes self-reliant. He also emphasized the need for the adoption of international best practices for priority sectors and consultations with international experts to achieve success. He stressed upon the need to enhance inter-ministerial coordination and public-private partnership for increasing exports. It should be kept in mind that the current account surplus emerged on the back of a sustained increase in remittances and a smaller trade deficit. He said that the country’s current account has been helped by a significant increase in remittances during the current fiscal year. So far, remittances from overseas Pakistanis during December 2020 rose by 16.2 per cent year-on-year to $2.436 billion, clocking in above $2 billion mark for the seventh consecutive month. The FPCCI ex-president warned that the pace of growth in imports is projected to increase further in the coming months following the abolishment of regulatory duty on imports of raw materials and semi-finished products. The trade deficit between July-December increased to $12.42 billion, up by 6.44 per cent. Earlier, the country’s trade deficit during FY20 had narrowed to $23 billion from $31.82 billion.
He said that in absolute terms, Pakistan’s export proceeds edged up to just $2.35 billion in December 2020 from $1.98 billion last year, which should be accelerated further to bridge the widening trade deficit.
Mian Anjum Nisar said the low exports volume and rising trade deficit were chronicle issues which should be resolved permanently. He said exportable items should be produced under the international demand to fully exploit the benefit of GSP-Plus status. He said that several industries and sectors were neglected in past. He said decisions should be made in the national interest, keeping aside the personal agenda. The FPCCI President said the government has to formulate long-term and consistent policies for the revival of industry and considerable improvement in exports, as contrary to regional countries, Pakistan’s exports have remained stagnant during the past 40 years, and unless attention was paid to all factors that hamper industrial and exports growth, the country might not be able to achieve desired results.
Mian Anjum Nisar said the industrial production after suffering months of damage inflicted by the corona pandemic is now clearly reflecting a revival in economic activities in the country. The long-term strategy needs structural reforms of the entire export sector, including high tech and innovative products, value-added exports commodities and market diversification towards unexplored markets like South America and Africa. Some of the impediments to industrial growth include the cost of production, poor governance, obsolete technology, low productivity, lack of competitiveness, supply constraints, and energy issues. He said that the current export portfolio is marred by a lack of diversification, as few products are exported by some exporters to limited markets. So, a major enhancement in exports requires huge and wide structural reforms.