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Tuesday March 19, 2024

Exports, investment remain dismal

By Mansoor Ahmad
May 26, 2017

LAHORE: Exports performance remained disappointing, but the Economic Survey 2016-17 on Thursday pointed out that in some product categories, lower unit value marred the quantitative increase; failing to mention that in many items exports declined both in value and quantity.

There is nothing to rejoice as far as our export performance is concerned. It seems the present regime has no idea of what has actually happened to Pakistani exports.

During global recession, the government justified the decline in exports to similar declines faced by China and India. It is true that the exports have started rising in Pakistan in April and May but the growth has been well below double digit.

Pakistan’s textile exports have hardly inched up by an average of three percent in past four months. The export package announced by the government has not delivered.

Thereafter, these rebates would be subjected to an increase of 10 percent over past year for each exporter. The exporters failed to boost exports even by 5 percent in past six months on blank rebates.

Another interesting analysis in the Economic Survey relates to imports, which state that the rise in overall import payments was mainly driven by higher purchases of fuel and capital equipment.

The Power generating machinery imports increased by 76.5 percent, textile 20.8 percent, construction 66.8 percent, agriculture 35.8 percent, and other machinery 53.1 percent, signalling increasing productivity in the industrial sector.

The survey failed to mention the total amount of investment made in dollar terms in these sectors. As far as textiles is concerned, the import of textile machinery has been almost negligible in the past four years, so an increase of 20 percent in import of textile machinery should be seen in that context. It would not be more than $200 million at best. Same is the case with agriculture.

The textile sector needs upgrade that requires investment of over $1.5 billion for the next four years. Otherwise we should say god bye to our basic textile sector.

In an economy growing at over five percent, and the China-Pakistan Economic Corridor (CPEC) investment pouring in, it is not a matter of satisfaction that foreign direct investment (FDI) amounted to $1.733 billion during July-April FY17 compared to $1.537 billion during the same period last year, posting a growth of 12.75 percent.

Food, power, construction, electronics, oil and gas exploration, financial business, and communication remained the main recipient sectors.

These sectors have been attracting foreign investment for last many years, and produce product and services for local consumption only.

Foreign Portfolio Investment (FPI) increased to $589.7 million during July-April FY17 compared to $404.3 million last year. This was because Pakistan Stock Exchange was finally handed over to a foreign strategic investor.

Remittances remained lower by 2.79 percent during July-April FY17. It was expected due to turmoil faced by oil producing countries.

In fact, the decline was lower than expected. The rosy picture painted in the Economic Survey for the next fiscal is based on wishful thinking. Pakistan would be lucky if the current remittance level persists next year.

On average, CPI inflation stood at 4.09 percent during July-April FY17 against 2.79 percent in the same period of FY16.

The inflation is likely to increase further in the next fiscal year.