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September 4, 2020

Exports plunge 20pc to $1.5 billion in August

Business

September 4, 2020

ISLAMABAD: Pakistan’s exports fell around 20 percent year-on-year to $1.5 billion in August as torrential rainfall adversely affected the trade activities, commerce adviser said on Thursday.

“Due to the unprecedented monsoon rains, resulting in disruption of supply chain, our exports for the month of August 2020 have recorded a decline of 19.5 percent as compared to August 2019,” Adviser to Prime Minister on Commerce Razak Dawood said in a tweet.

In August 2019, exports stood at $1.9 billion, according to the Pakistan Bureau of Statistics (PBS).

However, the gap between exports and imports continued to narrow during the month, Dawood said without citing the numbers.

“The positive sign is that regardless of this temporary decline, our trade balance continues to improve,” he said. “I have every confidence in our exporters that they will make up for the loss of August 2020.” Trade deficit narrowed around 15 percent year-on-year to $1.5 billion in the first month of the current fiscal year of 2020/21 as exports bounced back to the positive territory after four months of slump. However, analysts believed that the rain impact would be seen in September and therefore the situation was mistakenly interlinked.

“Exports for particular month are the reflection of lag month,” said economist Muzzammil Aslam. “Monsoon affect will be seen in September.”

Rains and urban flooding brought industrial production to a standstill in Karachi, which contributes over 55 percent to country’s overall exports.

Weak infrastructure could not sustain the heavy rainfall, leading to urban flooding, wreaking havoc across the city and hampering almost all business activities in the city. Industrial production declined more than 60 percent, while raw materials and finished goods stocked in warehouses and basements of the factories were destroyed.

Trade deficit narrowed 27.1 percent to $23.1 billion in the last fiscal year of 2019/20, but the reduction was mainly caused by suppressing imports rather than export sector’s recovery, traders said.

Exports declined 6.8 percent to $21.3 billion, whereas imports sharply fell 18.6 percent to $44.5 billion during the last fiscal year, the PBS data showed.

The large decline in imports has been the real force behind the reduction in the deficit because exports went up nominally, according to the Federation of Pakistan Chambers of Commerce and Industry. Exports have failed to record any visible improvement despite massive decline in rupee’s value.

Commerce adviser said exporters are encouraged that despite the calamity of rain and flooding, “we must pursue “Make in Pakistan’ policy and export-led growth”.