Jewellery takes the gloss off exports

Export numbers for the four months ending October 2013 were released by Pakistan Bureau of Statistics last week; and a bird’s-eye view of the numbers suggests that things are going in a positive direction.
PBS data show that total 4M FY14 exports were up by 5 percent to about $8.5 billion, with three of the four major groups, namely food, textile, petroleum and coal witnessing decent increases over the period.
Food exports was led by rice sales that saw a gain of nearly 28 percent despite a roughly 3-4 percent slide in average realised prices. Meanwhile, year-on-year increase in four month textile exports stood at 7.5 percent, led by substantial gains of 21 percent in bed-ware exports-–that alone makes up about 8 percent of total exports. Other textile export heavy weights such as cotton yarn, cloth and readymade garments saw decent gains of 5-7 percent.
Exports clubbed under “other manufactures group” were down about 20 percent in the four-month period, translating into a decline of $427 million.
The decrease in exports of “other manufactures group” is interesting because all major sub groups - namely sports goods, tanned leather, leather manufactures, surgical goods, chemicals and engineering goods-–that make up about 70 percent of this group-–show decent export gains. However, these gains were more than offset by sharp slide in jewellery exports, which were down by about $737 million or 83 percent year on year.
Partially countering the sharp slide in gold exports was a heartening boost in exports of petroleum products, where exports of top naphtha alone accounted for more than 6 percent of total exports in 4M FY14, compared to zero monthly exports since July 2012.
The rise in naphtha exports can be attributed to better throughput for refineries after the partial resolution of circular debt earlier this year. Whether naphtha exports will continue or whether it is a one-off event; this column will shed light on the subject later this week.
Looking ahead, the picture appears bright for exports, led by a likely increase in textile sector which is expected to reap additional gains of more than $700 million after GSP plus is rolled out from January 2014.
However, a close eye needs to be looked at other sectors, most of which reported month-on-month and year-on-year declines in October’s standalone comparison. If this becomes a trend, things may not eventually end up in a positive direction.