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IT exports fall 27pc in May to lowest level since February 2021

By Our Correspondent
June 29, 2022

KARACHI: Pakistan’s information technology exports fell by 27 percent month-on-month in May to lowest monthly level since February 2021, data showed on Tuesday.

IT exports stood at $183 million in May, down from $249 million a month ago, figures from the State Bank of Pakistan showed. The exports declined by 8 percent year on year.

The country exported $198 million worth of technology-related products and services in May 2021. The technology sector recorded exports worth $2.4 billion in 11 months of this fiscal year, contributing 38 percent to overall services’ export and marking a 25 percent year-on-year jump.

Total services exports fell 20 percent MoM to $514 million in May. The exports, however, increased 18 percent to $6.318 billion in July-May FY2022.

The export performance of the IT services firms has been encouraging helping increase foreign exchange earnings for the country, but the monthly decline in their export numbers in May is not a healthy development for the country’s trade and the current account deficits.

It has been assumed that the decline in IT exports is a result of the extended Eid holidays.

The growth in the country’s technology product and services exports remained higher since the pandemic helped a rise in freelancing activities.

The support for remote working and e-learning arrangements during the Covid-19 boom period and even after the pandemic-related instructions eased in many countries of the world contributed to the rise in the information and communication (ICT) exports.

Within ICT, exports increased across almost all segments, including software consultancy, call centers, and telecom services.

The government as well as the SBP is actively working to promote this rapidly growing services segment, including via facilitating receipt of export earnings and tax rebates and incentives.

Pakistan’s digital services firms and tech entrepreneurs are consistently increasing their exports and are now also benefiting from the sharp increase in global investments flowing into tech startups, the central bank stated in first quarterly report on the state of Pakistan’s economy for FY2022.

One of the major outcomes of the Covid-19 outbreak and the resultant social distancing and containment measures is the acceleration in the trend of digitisation.

The SBP, citing a study, said that an estimated 70 million additional people became digital consumers only in the Southeast Asia region after the beginning of the pandemic.

While e-commerce and distant learning platforms were among the major avenues for internet usage, the pandemic also stimulated a drive to digitise a wide range of other services, including financial technology (fintech) and logistics companies.

Many of these services attempt to address structural imbalances in developing countries, in areas like financial inclusion, gender disparity in financial access, and efficiency lags in the retail sector and logistical connectivity.