close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
June 11, 2021

Current fiscal will end up with exports of $25 bn: Razak

Adviser to PM on Commerce and Textile Razak Dawood

ISLAMABAD: Pakistan’s goods exports have increased to $22.5 billion in the first 11 months of the current financial year 2020-21 and it is hoped that the outgoing fiscal will end up with exports of $25 billion. This was announced by Adviser to PM on Commerce and Textile here on Thursday during the press briefing held on Economic Survey 2020-21.

However, according to the Economic Survey 2020-21, exports during July-March FY2021 amounted to US$18.7 billion as compared to US$17.4 billion in the same period last year, which shows an impressive growth of 7.1 percent as compared to the 2.2 percent in the same period last year.

And the total imports during July-March FY2021 clocked at US$39.5 billion as compared to US$34.8 billion in the same period last year, showing a growth of 13.6 percent. Non-energy imports remained the main contributor in the rising import bill. The surge in imports may be attributed to the rising demand for intermediate goods due to the resumption of economic activities: supply shock in agricultural products especially wheat, sugar and cotton; government’s accomodative measures to underpin the production of industrial sector in the form of removal of customs duty on import of raw-materials; and concessionary loans.

The food group, despite being a significant sector of the economy, declined by 1.9 percent during July-March FY2021 compared to the same period last year. Within the food group, rice exports decreased both in quantity and value by 2.1 and 8.2 percent, respectively. The Basmati rice exports declined by 27.3 percent in value and 33.2 percent in quantity during July-March FY2021 as compared to the corresponding period last year. The contraction in export of rice was mainly driven by higher prices due to unavailability of shipment containers, which raised the average cost of shipping. Taking advantage of the situation, India took over the market by offering lower prices to increase its share further. However, it is important to highlight that Pakistan has started reaping benefits.

Export earnings from fruits contracted by 0.3 percent in value and increased by 14.8 percent in quantity. Vegetables also witnessed a decline of 4.6 percent in value and 1.6 percent in quantity. Fish and fish preparation subgroup decreased by 4.3 percent in value due to low price in international markets but its quantity increased by 4.8 percent as compared to the last year. Exports of oil seeds, nuts and kernels witnessed a growth of 241.7 percent in quantity and 172.9 percent in value during July-March FY2021 as compared to the same period last year. The export of spices also increased by 5.2 percent in value and 10.7 percent in quantity during the period under review. Meat and meat preparation increased both in value and quantity by 6.5 and 16.3 percent, respectively, signaling a recovery in production of livestock. Textile group, which has around 60 percent share in total exports, witnessed a growth of 9.1 percent during July-March FY2021 compared to the corresponding period last year. Rebound in exports of textile is the outcome of a series of incentives to support exporters to meet the challenges in the wake of COVID-19 and disruption in supplies. Moreover, the government’s decision to keep businesses open during lockdown provided an opportunity to secure orders diverted from economies under strict lockdown. Higher textile exports came on the back of quantum growth in high value-added products, particularly knitwear, home-textiles (bedwear and towels) and made-up articles. At the same time, raw cotton, cotton yarn and cotton cloth showed a declining trend. To prop up the exports of high-value added textile, additional customs duty on import of raw cotton has been exempted by the government. Besides this, the sector also benefitted from Export Financing Scheme (EFS) and out of Rs68.7 billion EFS loan, Rs44.8 billion has been given to the textile sector during July-March FY2021. This significantly helped to improve the liquidity conditions and enhanced the capacity utilization of the sector.

Meanwhile, declining share of China in the US apparel market and shifting focus from apparel to global textile market provided some room to Pakistan and other competitors to enhance their shares in apparel exports. In case of home textiles (bedwear and towels), exports increased by 16.6 percent Y-o-Y to US$ 2.7 billion on the back of higher unit values. Knitwear exports grew by 20.9pc in value and 45.0 percent in quantity as compared to the corresponding period last year. Export earnings of readymade garments showed growth of 4.5 percent in value but a decline in quantity by 35.9 percent during the period under review. The exports of intermediate commodities like cotton yarn witnessed a fall, both in value and quantity by 12.0 and 13.0 percent, respectively. It could be attributed to the lower production due to unfavorable weather conditions, pest and locust attacks last year. The same trend continued in the current fiscal year. Cotton cloth export declined both in quantity and value by 56.3 and 8.3 percent, respectively. The exports of petroleum products, largely affected by COVID-19, slumped by 35.3 percent. Moreover, petroleum crude exports also dropped by 58.9 percent and reached US$62.7 million. Export of items like leather tanned and gloves etc. could not grow in quantitative terms. In the case of sports goods, football – the major export item – witnessed a decline both in quantity and value by 29.7 and 23.2 percent, respectively. Export of carpets, rugs and mats registered a growth in value by 11.6 percent whereas the export quantity decreased by 16.5 percent as compared to the same period last year. The export of cement witnessed a strong growth in quantity by 11.7 percent but in value terms it remained the same as last year partly due to reduction in Federal Excise Duty (FED) in the wake of COVID-19 and a fall in coal prices. China and Sri Lanka were the main destinations as both countries used infrastructure as a tool for revival of the economy during the pandemic. Guar and guar products registered a decline in value by 5.5 percent but grew in quantity by 8.1 percent.

Among the top export destinations, the USA continued to be the largest export market for Pakistan during July-March FY2021. Exports to the USA moderately increased from 17.3 percent in FY2020 to 19.7 percent in FY2021. Similarly share of exports to China increased from 8.0 percent to 9.7 percent during the period under review.

However, the highest contribution to the growth of total imports is that of the food group. During July-March FY2021, the food group witnessed a growth of 54.5 percent and its import clocked at US$6,121.4 million as against US$3,963.3 million during the comparable period last year. Within the food group, a surge was observed in the import of wheat, sugar, palm oil and dry fruits. Due to supply disruptions in wheat and shortage of production in sugar, the government reverted to import of wheat and sugar to meet demand and to control the price hike.

The edible oil, soybeans and palm, import bill, the heaviest item in the food group, increased in both quantity and value by 33.9 and 7.4 percent, respectively. The increase in the import bill of edible oil was mainly attributed to the rise in global palm oil prices, mainly due to lower production in Malaysia and rise in palm oil export levy by US$5 per tonne.

The import bill of pulses surged by 4.6 percent during the period under review. The import of petroleum group declined by 14.7 percent during the period under review and reached US$5,471.0 million as compared to US$6,417.3 million during the corresponding period last year. This was mainly due to historically low global oil prices and limited transportation in the wake of COVID-19.

Electrical machinery and apparatus imports plummeted by 36.4 percent to US$1,112.6 million during July-March FY2021 compared with US$1,748.8 million in the same period last year. Within the machinery group, telecom sector imports accelerated by 44.0 percent to US$1,913.7 million as compared to US$1,328.5 million last year.

Mobile phone imports increased by 56.7 percent and reached US$1,535.9 million as compared to US$979.9 million last year. Rising demand for mobile phones may be attributed to multiple factors, including reduction in taxes, changing work and educational environment like work from home and online schools in the wake of pandemic. The import of transport group surged by 68.7 percent and reached US$2,018.3 million during July-March FY2021 as compared to US$1,196.5 million last year. The import of road motor vehicle increased by 73.0 percent of which CBU increased by 82.5 percent and CKD/SKD increased by 91.2 percent during the period under review. Metal group import increased by 17.8 percent and reached US$3,621.4 million.