National exports ‘nosediving’ for seven months

ISLAMABAD: Pakistani economy’s merchandise exports have been on ‘nosedive’ for the seventh straight month in January 2016, down by 13.9 percent to $1.77 billion compared to a year earlier when exports were recorded at $2.06 billion.

During seven-month period (July-Jan 2015/16), exports down by 14.37 percent to $12.08 billion against $14.11 billion in same period of last year, the Pakistan Bureau of Statistics (PBS) Wednesday reported.

Independent economists call it a ‘worrisome trend’, as around Rs344 billion refunds cases are pending with the government for years, especially of textiles sector that contributes more than half to the exports.

“It’s a highly disturbing development that Pakistan’s exports are declining for last several months in a row, and yet the government has paid little or no attention to arrest the declining trend,” Dr Ashfaq Hassan Khan, ex-finance advisor said.

“The government must resolve the refund issues of the textiles sector and also review the additional duties which have been imposed on trade sector and must urgently talk to the leading exporters to know their grievances” he suggested. 

Since July 2015, selling of Pakistani products in international market has been continuously reducing and in this month [July] it dipped by 16.9pc over corresponding month, in August the decline was 3.5pc, September 20.37pc, October 11.38pc, November 15.12pc, December 16.8pc and now in January 2016 it again dipped by 13.9 percent over same month of last year.

Senior economist and Executive Director of Sustainable Policy Institute (SDPI) Dr. Abid Sulahri commented, “The government has no focus on trade in its overall economic policy, as its federal budget, trade policy and Vision 2025 have no connectivity and commonalities to boost exports.”

“Visa issues Pakistani exporters are facing and the country’s international image is also hurting the exports, as foreign importers are always under travel advisories, while the local exporters have little chances to get the importing countries visas. At the same time, the government has withheld billions of refunds, duty drawback and others payments that not only hurting the exporters but also the SME’s,” he said. 

Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum said, “The government wants to make this country just a trading country and not industrial. Due to various issues, production is coming down and also employment.”

“Since 2011, textiles sector’s Rs344 billion of payments have been stuck with the government that include DLT (drawbacks on local taxes and levies), sales tax and funds under the textile policies under which provision of around Rs160 billion were agreed with the sector,” Bilwani said.

“Since long, the textiles ministry is without a minister, despite the sector contributing more than half of country’s exports. The government is even paying no head to the directions of standing committees of both the houses of the parliament.”

Seven-month trade deficit ballooned by 4.31 percent to $13.6 billion against a deficit of $13.07 billion in the corresponding period of the last fiscal year. Exports dropped by 14.37 percent to $12.08 billion and imports down by 5.38 percent to $25.72 billion.

In January 2016, exports down by 0.89 percent to $1.772 billion over $1.788 billion in December 2015, and 13.9 percent decline over January 2015 when it was recorded at 2.058 billion.

Imports also reduced by 8.7 percent to $3.51 billion in January 2015 as compared to $3.84 billion in December 2015, and were up 15.4 percent over $3.04 billion in January 2014.

Economists say that if a country is importing more goods than it is exporting for a sustainable period of time as is the case of Pakistan, it indicates that it is essentially going into debt. It would slash the domestic aggregate demand and so as the spending on domestic products and resultantly the stocks prices.

It is worth mentioning that the government set an export target of $25.5 billion for the current fiscal year. Last fiscal year, the exports were recorded at $25 billion.

Analysts said the continuous reduction in exports and imports are sending an alarming signal to the government’s policy planners, as they always indicate shrinking economy with low economic activities at home and less exportable items to offer in the international market.