EXPORTS TARGET

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Sep 17 - 23, 2012

Economic development is one of the main objectives of every society in the world and economic growth is fundamental to economic development. There are many contributors to economic growth. Export is considered as one of the very important contributors among them. There are also some concerns about the trade, especially between the primary and industrial goods exporting countries where the terms of trade are deteriorated against the poorer countries.

During 2011, the unfavorable global environment had slowed down the world output and trade volume; world output which grew by 5.3 per cent in 2010 decelerated to 3.9 per cent in 2011. This slowing down of the global economic activity had caused a sharp decline in the growth of world trade. Against the strong pick up of nearly 13.0 per cent in 2010 the growth of world trade dropped to 5.8 per cent in 2011.

MAJOR EXPORTS MARKETS DURING 2011-12

MARKETS (PERCENTAGE SHARE)
USA 14.7
UK 5.1
Germany 4.8
Honk Kong 1.6
U.A.E. 9.0
Sub-Total 35.2
Other Countries 64.8
Total 100.0

The Global economic slowdown and consequential decline in the growth of world trade had also depressed the international commodity prices. The prices of non-fuel commodities witnessed a deceleration from 26.3 per cent in 2010 to 17.8 per cent in 2011; and, are projected to grow negatively by 10.3 per cent in 2012.

Amid the difficult global economic environment, the slowing down of the world trade, the drop in international commodity prices, and the energy & gas shortages domestically, the Government of Pakistan has projected an export target of $25.812 billion for the fiscal year 2012-13 as against $23.641 billion, showing an increase of only nine per cent, according to the annual plan 2012-13. For the fiscal year 2012-13, the export proceeds remained behind the target of $25 billion projected for the same year by almost $1.4 billion by end June 2012. It was estimated that the exports from Pakistan during July, 2012 amounted to Rs.194,182 million (provisional) as against Rs.201,488 million (provisional) in June, 2012 and Rs.185,587 million during July, 2011 showing a decrease of 3.63 per cent over June,2012 but an increase of 4.63 per cent over July, 2011. In terms of US dollars the exports in July, 2012 was $ 2,057 million (provisional) as compared to $ 2,141 million (provisional) in June, 2012 showing a decrease of 3.92 per cent and by 4.64 per cent as compared to $ 2,157 million in July, 2011. Main commodities of exports during July, 2012 were cotton cloth (Rs.18,977 million), knitwear (Rs.18,619 million), jewellary (Rs.18,470 million), cotton yarn (Rs.16,252 million), readymade garments (Rs.15,419 million), bedwear (Rs.14,783 million), towels (Rs.6,188 million) rice basmati (Rs.5,627 million), rice others (Rs.5,584 million), and madeup articles (Rs.5,007 million).

Although, textile exports are expected to be no more than $ 10 billion during the current year as compared to $ 14 billion in the preceding year. It is also expected that the textile production would decline by 30 to 35 per cent due to 3 days of loadshedding a week. Last year the textile sector faced gas loadshedding for two days a week, however, during the fiscal year 2011-12, it was being curtailed for 3 days that could result in considerable reduction of textile exports, adding that about 80 per cent of the industry (6000 units) located in Punjab would be the main sufferers. Unfortunately every year, the country loses export orders worth millions of dollars and this issue is still unsolved due to the government's negligence in realizing that the textile industry, the major foreign exchange earner of Pakistan, is being forced to operate at well below capacity due to gas loadshedding.

CONCENTRATION OF EXPORTS

The process of decrease in concentration of exports items continued in the fiscal year (July- April 2011-12) as the share of other items in overall exports increased to 39.0 per cent against the 28.5 per cent during 2006-07, a 10.5 percentage points increase during the period. Moreover, the share of the other items category witnessed a 6.2 percentage points increase during July-April 2011- 12 compared to the same period last year.

In spite of this structural change in exports of the country, the major share of Pakistan's export was concentrated in a few items with only three items (cotton manufactures, leather and rice) making up 61.0 per cent of total exports during July-March 2011-12.

EXPORTS

COMMODITIES. %CHANGE FOR VALUE IN MILLION RUPEES IN JULY, 2012 OVER
JUNE, 2012 JULY, 2011
Cotton cloth -4.15 -7.05
Knitwear 9.53 -5.47
Jewellary -4.95 167.45
Cotton yarn 6.93 54.08
Readymade garments 2.65 12.07
Bedwear 5.39 -6.32
Towels 0.34 7.17
Rice basmati -19.06 -38.84
Rice others -25.68 -11.24
Madeup articles( excl. towels, bedwear) -2.87 2.33

Despite being concentrated in a few markets, Pakistan has witnessed some geographical diversification in exports. During 2005-06, 47.2 per cent of the country's exports were concentrated in five markets (USA, UK, Germany, Hong Kong and U.A.E.) of the world and remaining share of all other countries was 52.8 per cent. This concentration is on continuous decline since 2005- 06 and recently the share of these five markets stood at 35.2 per cent whereas the share of all other countries increased to 64.8 during July-March 2011-12 compared to 52.8 per cent share during 2005-06.

CONCLUSION

Unfortunately, due to the massive power and gas load shedding in the country, it is expected that the exporters would not meet the exports target 2012-13.