S.KAMAL HAYDER KAZMI
Research Analyst, PAGE
Jan 26 - Feb 01, 2009
Despite a recession in world economy, the Pakistan's exports have shown an increase in the current FY09 by meeting the initial exports target. Pakistan's exports during the first half of current financial year were recorded at $ 9.57 billion as compared to $ 8.65 billion exports in the corresponding period of last financial year, showing increase of 10.57%. However, exports were reduced by 14.18% during the month of December by dipping from $1.52 billion in the last month to $1.31 billion. According to the Federal Bureau of Statistics (FBS), in December 2007, exports from the country witnessed nominal decrease of 0.7%.
EXPORTS BY ECONOMIC CATEGORIES
TOTAL PRIMARY COMMODITIES SEMI-MANUFACTURES GOODS MANUFACTURED
2008 Jan 91,319.70 12,038.50 9,543.20 69,738.00 Feb 96,314.70 15,098.70 9,289.10 71,926.90 Mar 111,168.90 17,192.90 11,985.40 81,990.60 Apr 113,816.00 21,145.80 11,837.00 80,833.20 May 129,846.90 26,816.90 12,525.00 90,505.00 Jun 128,362.60 25,050.10 11,546.50 91,766.00 Jul 132,665.00 24,346.50 11,925.20 96,393.40 Aug 116,196.30 18,575.30 10,377.80 87,243.20 Source: FBS
CURRENT SITUATION OF EXPORTS
Currently, the country was going to surpass its export target of $22 billion this year as the data of first four months. However, the government has failed to enhance its power generation capacity in the 10 months since taking power in March last year and despite that it is making tall claims to end the looming power crisis by December the frequency of power breakdowns was reduced, but the situation is fast deteriorating and this time with more severity, which has again put a question mark over the government's commitment to resolve the crisis. There are some 700 to 800 industries with some 400,000 industrial workers in Faisalabad. Industrial workers are on the verge of losing their jobs if the power crisis is not immediately controlled. Both employers and workers are gripped by uncertainty and if the situation persists, workers may protest with full might and the government may face some tough times. The textile sector is especially under severe problems and it is ironical that a sector which contributes 60% in the country's exports is being neglected. Industrialists are saying that closure of industries owing to power shortage does not only affect the business community, but would also ruin hundreds and thousands of daily wagers, who are under cross fire from both poverty and sky-rocketing inflation. Industrialists also urge the government to immediately bring power on top of its agenda, which is affecting our economy and social web, as it is directly associated with unemployment. The government is not taking into account the gravity of the situation; factories are shutting down, leaving thousands of workers unemployed. However, things can come under control if the government seriously thinks over the solutions of this severe crisis. According to State Bank's report for the fiscal year 2007-08 the top three impediments which had hit the manufacturing sector are energy constraints, capacity constraints and input constraints. And, that growth in the manufacturing sector of the country has declined for the third consecutive year and posted a six year low growth rate in FY07-08.
PAKISTAN'S EXPORT BY REGION
(Value in 000 $)
2004-05 % CHANGE 2005-06 % CHANGE 2006-07 % CHANGE 2007-2008 % CHANGE American Region 3,906,492 17.27 4,723,385 20.91 4,805,564 1.74 4,409,434 (8.24) Western European Region 4,036,502 9.41 4,208,807 4.27 4,513,103 7.23 5,028,802 11.43 Asian Region 3,117,363 23.03 3,669,325 17.71 3,581,645 (2.39) 4,058,480 13.31 Middle East Region 2,188,295 13.88 2,490,178 13.80 2,675,112 7.43 3,862,251 44.38 African
801,622 49.71 950,602 18.58 941,596 (0.95) 1,134,293 20.46 Oceania Region 156,536 (7.09) 165,025 5.42 158,623 (3.88) 178,372 12.45 East European Region 184,271 37.79 243,855 32.33 300,600 23.27 380,651 26.63 GRAND TOTAL 14,391,081 16.87 16,451,177 14.32 16,976,243 3.19 19,052,283 12.23 Source: Board of Investment GoP
PROJECTED EXPORTS TARGET
The Government of Pakistan in the Trade Policy for 2008-09 has projected exports target of USD 22.1 billion. Although the policy has not formally announced any import target, it is expected that it will go beyond USD 36 billion. The downward trend in oil prices in the global market was very helpful for the government struggling to manage twin deficits in the face of fast depleting foreign exchange reserves. Because of rising trade deficit, the foreign exchange reserves had come down to a dangerous level.
Exports are the backbone of any economy. In Pakistan, the exports have been targeted to grow by 16.5% in the current fiscal year to meet the annual exports target of $22.1 billion. Undoubtedly, the foremost concern is the present energy crisis that has seriously stifled manufacturing activities in the country. Energy deprivation not only makes high industrial growth in the long-term unsustainable, but also increases the import burden on the economy. In order to give some relief to our exporting industry the SBP has recently announced Rs12 bn plan to help borrowers of the export financing scheme, deferred payment of their loans for one year. However, the borrowers having non-performing loans would not be able to get the facility. Indeed this positive step will boost our exporting industry and we might expect a positive result in the future.