$1 BILLION SHORTFALL IN EXPORT TARGET
There are negative trends in exports of various major items
From SHAMIM AHMED RIZVI
April 01 - 07, 2002
The Commerce Minister, Abdul Razzak Dawood, has now admitted that despite best efforts of the government, the export target fixed for the current financial year may not be achieved. Addressing a press conference he said that the target of $10.1 billion is unlikely to be achieved and he feared a shortfall of over $1 billion.
Independent economists, however, do not agree even with this estimate. According to them the eight months data of the current fiscal year, shows $5.8 billion total exports, compared with $5.99 billion of the corresponding period of last year. If the current trend persists, exports during 2001-2002 would end up around $8.5 billion, against $9.2 billion of 2000-01. Exports during February 2002 ($652.1m) showed a decline of 13.6 per cent in February 2001 ($754.7m). Though the cumulative decline in exports of July-February period was just 3 per cent, the trend of market loss is gaining momentum, coupled with impact of the stronger rupee against US dollar.
Official statistics show negative trends in exports of various major items, including rice 16.74 per cent; raw cotton 91.49 per cent, fish and fish products 11.87 per cent; vegetables 6.26 per cent; tobacco 22.93 per cent; cotton yarn 11.22 per cent; knitwear 10.30 per cent; art, silk & synthetic textile 25.72 per cent; and carpets, rugs and mats 15.99 per cent.
Particularly, the textile sector problems were worrisome. Almost 65 per cent of total Pakistani exports are consists of cotton and textile products. It's the main employment provider in the industrial sector. Fall in exports had slowed down growth momentum of the textile industry, putting off thousands of job. The official rate of unemployment is 7.8 per cent.
Since September 11, incidents, major international buyers of Pakistani textile products had either cancelled or suspended their orders, mainly fearing non-supply or delayed shipments due to Afghan war in the region. Mainly US buyers of Pakistani products inflicted losses, and despite the repeated assurances and top-level engagements with the US administration, majority of them were still shying away from Pakistan. During visit of President Pervez Musharraf, US administration announced a meagre $142 million trade package for Pakistan till 2004, much short of the expectations of Pakistani Commerce Minister Abdul Razzak Dawood.
The government was hoping a free trade agreement (FTA) with the United States, which could boost its exports annually by $500 million, from $2.5 billion per annum to $3 billion per annum. The European Union, however, offered Pakistan one billion dollar trade concessions till 2004, effective January 2002, by enhancing quotas and lowering duties. However, there were no visible gains so far of this concession. One possible reason could be glut in the international commodity market that had lowered the prices of major items, like rice and low value added cotton products.
The trade figures released by the government for the 8-month period July-February (2001-2002) indicate a relatively dismal picture. The growth in exports remained negative and the imports also reflected a larger slide during this period. However, since the declining trend in imports markedly outpaced the rate of reversal in exports, the trade gap narrowed down by a substantial margin of 45.5 per cent, which reflected a highly positive aspect of the visibly negative trend in the country's international trade during the period under review. Expansion in a country's international trade usually makes up a scenario of stepped up economic activity and investment potential. The trade figures for the 8-month period would point to a phase of economic recession which incidently was not very different from the situation in other parts of the world. In fact, slowdown in Pakistan's exports can be attributed to the low level of economic activity and consumption levels in most of the developed countries. The encouraging feature for Pakistan was narrowing down of its trade deficit and consequently the country's payments would be considerably reduced, easing the pressure on foreign exchange reserves.
The slowdown in the Pakistan's export trade during the first six months of the year was inevitable in the wake of the fall-out of September 11 terrorist attacks on the World Trade Centre in New York and Pentagon Building in Washington. The subsequent military action against Afghanistan by the US-led coalition which was joined by Pakistan as well, resulted in a major disturbance in Pakistan's economic activity. The export trade in particular was adversely affected by the imposition of war risk insurance in addition to an increase in shipping freight rates. Under these circumstances, the growth in exports could hardly escape upsets.
The prospects during the remaining part of current financial year should promise a satisfactory improvement in the situation specially in the context of increase opportunities which will be opened up for Pakistani exporters in the European Union market. At the same time it is expected that the promised concessions by the US government for greater access to Pakistan's exports would have a positive impact, though the US economic relief package offered to President Musharraf during his recent visit to Washington falls far short of Pakistan's expectations. The Commerce Minister has also identified China as a potential market for Pakistan's exports which may be rapidly increased and diversified steadily in the coming years provided Pakistani exporters put up extensive efforts in market research in that country for Pakistani products.