Similar to 6MFY18 figures, exports continued to rise by 11 percent over 7MFY18. Textile rose by 7 percent, led by knitwear and ready-made garments, contributing to 40 percent of the rise in exports. Foods, with the resumption of sugar exports accounted for nearly 30 percent of the rise. However, the rise in exports was nowhere significant enough to counter the rise in imports as balance of trade worsened by 26 percent at $21.5 billion.
The cyclical nature of our exports is driven by two major commodity groups: textiles and food. Food exports are propped up through temporary relief packages such as cash subsidies and sales tax refunds. Textiles have been supported by incentive packages by the government. Despite efforts however, the overall trend is not promising with the month on month average percentage change over the last year at 1.37 percent.
Devaluation of the rupee and the export package seem to have done no favours. While the devaluation helped drive up imports by 19 percent, it has not boosted exports on a month-on-month basis. If anything, exports have flat-lined over the last two months.
The export package as yet seems to be a hit-and-miss. According to the Pakistan Readymade Garments manufacturers and Exporters Association (PRGMEA), the government and central bank appear to be not serious about implementing the package. The allegation arises from a change in procedure for vetting documents; earlier it was the responsibility of the association to examine documents and exporters claims to ensure authenticity. Now the exporters have been asked to submit their claims directly to banks that lack the technical expertise and staff to examine and evaluate claims, creating procedural delays and difficulties.
As a result, exports have not had a promising trend at a time when the current account deficit has been occupying a lot of media space and conversations. Between the export package and subsidies, billions of rupees have been invested or promised by the government to ensure exports to grow. But as yet, they have borne little or no fruits.
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