According to the worldwide economists, the global trade has been at a historic low since the recession in 2008, falling to -3 percent in January 2019 from 11 percent in January 2018. Furthermore, global growth is estimated to be moderate for the year 2019. Global trade during last year remained slow on account of decelerated export orders and global manufacturing activity, mainly in capital goods. Global output and investments are probable to be suppressed during 2019 because of uncertain business environment stemming from expected disorderly Brexit and US fiscal policy.
Prices of metal and agricultural commodities also weakened because of concerns about fluctuation in trade and growth. However, if these differences are resolved without any further trade barriers and softener financial condition is observed then growth could be lifted up.
In the developing countries like Pakistan, the present government is focusing on making the exports a driver of sustainable economic growth. It is endeavoring to enhance competitiveness and efficiency of the industry especially export-oriented sector and import substituting production, reducing structural anomalies and enhancing trade by rising institutional efficiencies and reducing cost of doing business.
Statistics showed that the export target in Pakistan for FY2019 was set at US$ 28 billion. According to the provisional statistics compiled through the Pakistan Bureau of Statistics (PBS), the exports during April 2019 was $ 2,094 million as against to $ 1,979 million during March 2019 explaining a rise of 5.81 percent but declined by 1.54 percent as against to $ 2,127 million in April 2018. Furthermore, Pakistan’s exports during July-April 2018-19 totaled $ 19,169 million against $ 19,191 million during the same period of previous year explaining a decline of 0.12 percent. During the period under review, it is also recorded that main commodities of exports during April 2019 were Knitwear (Rs.34,170 million), Readymade garments (Rs. 32,658 million), Bed wear (Rs.25,527 million), Cotton cloth (Rs.25,208 million), Rice others (Rs.20,288 million), Cotton yarn (Rs.14,909 million), Rice Basmati (Rs.10,248 million), Towels (Rs.9,977 million), Made-up articles excl. towels & bed wear (Rs.8,112 million) and Fish & Fish preparations (Rs.7,706 million).
On the other hand, Pakistan’s import target for FY2019 was set to US$ 56.5 billion. Statistics also recorded that imports during July-April, 2018-19 totaled $ 45,471 million as compared to $ 49,360 million during the same period of last year explaining a fall of 7.88 percent. According to PBS, main commodities of imports during April 2019 were Petroleum products (Rs.73,614 million), Petroleum crude (Rs.60,951 million), Natural Gas Liquefied (Rs. 44,730 million), Plastic materials (Rs. 31,526 million), Iron & steel (Rs.24,428 million), Electrical machinery & apparatus (Rs. 24,183 million), Raw cotton (Rs. 22,610 million), Palm oil (Rs. 21,610 million), Iron and steel scrap (Rs. 16,098 million) and Medicinal products (Rs.14,400 million).
The experts also mentioned that the reduction in imports is because of fall in imports of furnace oil, machinery & electric equipment, palm oil and textiles. The present situation of falling imports shows that imports will be according to the estimates. With the declining global demand, weakening consumer and business sentiment among the major economies, trade tensions and economic stabilization measures at home, the imports are estimated to be further fall.
Additionally, the Government of Pakistan has also launched import substitution drive that will be instrumental in reducing pressure on current account. The Finance Supplementary (Second Amendment) Act, 2019 mainly was offered tariff concessions to those industries that can offer import substitution. It lowered tariffs on the raw materials and intermediate goods that can help domestic companies in meeting local demand that is presently being fulfilled by the foreign firms. According to PBS, imports into Pakistan during April 2019 amounted to Rs. 670,895 million as compared to Rs. 578,273 million during March 2019 and Rs. 586,224 million during April 2018 explaining a rise of 16.02 percent over March 2019 and by 14.44 percent over April 2018. Pakistan’s imports in April 2019 was $ 4,753 million as against to $ 4,155 million during March 2019 explaining a rise of 14.39 percent but declined by 6.42 percent as against to $ 5,079 million during April 2018.