When it comes to Pakistans overseas sales performance in the first seven months of current fiscal year, the one-liner is that green shoots are becoming visible.
For one, total exports in 7M FY14 grew 4.6 percent year on year to $14.7 billion, after accounting for 9 percent month-on-month decline in January. On a standalone basis, this growth is not very impressive. But, had it not been for the nearly $800 million drop in jewellery exports, the seven-month growth number would have been a tad above 10 percent instead of 4.6 percent.
Now, lets move over to some specifics.
The data released by Pakistan Bureau of Statistics shows that rice exports stood at $267 million in January 2014, a growth of 8 percent over the same month of last year. In fact, the last time monthly rice exports stood nearly as high as it was in June 2008 ($289 million).
The seven-month growth number in rice exports is even more exciting: 21 percent. However, it is still not promising because in terms of quantity, the basmati rice exports fell nearly 10.5 percent whereas exports of other rice qualities eked out a gain of mere 0.75 percent.
Fetching good prices is surely a good thing. But high school economics tells us that prices tend to be cyclical. Real export growth has to come from growth quantities. Still, lets not be too ungrateful and look at how the textile exports performed.
The countrys biggest dollar-earning sector brought $8.35 billion in 7M FY14, a growth of 7.5 percent over the comparable period of last year that comes despite a 13 percent month-on-month drop in January 2014.
Unlike rice, the growth in textile is driven by quantities and not prices (see table). Considering that average price fetched in 7M FY14 is lower in most of the key textile exports, the growth in textile exports should be read with a tinge of optimism. One can expect more quantities to be exported out as the impact of GSP+ becomes visible over time.
The third green shoot is visible in the other manufactures group that saw a nearly 15 percent year-on-year decrease in the seven months ending January. One might wonder how in the world that represents a green shoot.
Here is why: the other manufactures group clustered by the PBS represents a number of SME sectors which contributed about 20 percent to total exports in FY13. Included in it is the jewellery sector whose exports fell by $788 million in the seven-month period.
If jewellery exports had remained unchanged at last years levels, the other manufactures group would have posted a year-on-year increase of 10 percent in dollar terms.
The other good thing is that--much like textile--most of the key items clubbed in other manufactures group saw decent increases in the quantity of goods exported. For instance, quantities of football exported grew by 29 percent in 7M FY14, quantities of leather garments and gloves exported rose by 23 and 28 percent, respectively; whereas footwear exports increased by 14 percent in quantity.
While a detailed account of jewellery exports has already been explored separately in yesterdays columns, the verdict on all others exports in the year is that it is promising.
Textile is growing and can be expected to grow further. The exports of SME-led other manufacturers are growing and, based on BR Researchs recent interaction with some of the SME leaders in north and central Punjab, SMEs are in high spirits about export prospects. Whether these green shoots will gather strength over the next few months or will they turn yellow is a different matter altogether.
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Growth in key textile export items: 7MFY14 vs 7MFY13
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Average price
Quantity USD per unit
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Cotton yarn -5.5% 5.4% 0.8%
Cotton cloth 11.0% -7.1% 10.3%
Knitwear 16.1% -6.4% -12.8%
Bedware 18.9% -16.6% 2.1%
Towel -2.2% 5.5% -11.6%
Readymade garments 6.7% -7.1% -5.1%
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Source: PBS
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