Drop In Exports
Good news is hard to come by these days when it comes to the economy as it is being reported that the country’s exports of merchandise entered a negative growth in July after 22 months. According to the data shared by the Pakistan Bureau of Statistics, export proceeds fell by 5.17 percent to $2.21 billion in the first month of the current fiscal year from $2.34 billion in the corresponding month last year. On a month-on-month basis, exports went down by 24 percent indicating a downward trend in the export sector.
This is concerning considering the prevailing state of the country’s economy, and also because the last time exports posted a negative growth trend was back in August 2020. The textile sector—one of the main drivers of the export sector—has already been complaining about the rising cost of energy and raw materials due to the depreciation of the currency. Now, a shortage of gas, electricity and imported raw materials is contributing to this downward trend. In addition to this, exporters have also complained about refunds that stuck with the Federal Board of Revenue.
Some comfort can be derived from the fact that the import bill also dropped by 12.81 percent to $4.86 billion in July from $5.57 billion over the corresponding month of last year. On a month-on-month basis, the import bill dipped by 38.31 percent. It must be mentioned however that the primary reason for this is lower energy imports as the government had ordered excess amounts during the previous months.
Cosmetic measures such as banning luxury items have had a minimal to negligible effect on our overall import bill. Given our dependency on importing petroleum goods, the situation regarding imports is unlikely to change in the near future. Therefore, increasing exports is going to be critical to addressing our trade deficit issues. It is imperative that the government address the grievances of the export sector and work toward facilitating the entry of new entrants into the market. A proactive approach focusing on boosting exports and local production is what the government must be focused on.