Declining exports hurting economy, causing joblessness: PBF report

KARACHI: A detailed report of Pakistan Businesses Forum (PBF) stated that despite Pakistan’s myriad political issues, the declining trend in exports has had a long-term negative impact on the country’s economy.

Due to decreasing exports and the government’s failure to end the economic crisis, approximately seven million people in Pakistan’s textile and textile-related industries have lost their jobs.

Dr Urwa Elahi, Additional Secretary General for Research at the PBF, said that Pakistan is already behind in achieving financial equilibrium because the volume of its imports is much higher than the level of its exports, which is hurting the country’s overall economic condition.

The crisis in the balance of payments is getting worse by the day because exports haven’t improved and financial planners are trying to control imports with half-hearted measures.

There are many reasons why exports haven’t increased, but it appears that most of them are not addressed in the right way, leaving the export industry stuck in the mud.

Dr Urwa Elahi stated that a structural flaw in the country’s economic practices necessitates a complete overhaul, which must be completed quickly, and that it will be difficult to increase export volumes.

Exports fell for the second month in a row, falling 18.3% from $ 2.9 billion a year earlier, proving that Pakistan’s economy is consistently shrinking.

In contrast, imports increased 11.3% to $ 5.25 billion in November, resulting in a $ 2.88 billion monthly trade deficit. Although the coalition government is credited with reducing the annual trade deficit, many economists are of the opinion that the fictitious strategies implemented by the current finance minister may cause long-term harm to the national economy.

The manufacturing sector needs imports in order to maintain its high performance; otherwise, it would be difficult to meet the country’s revenue needs.

Exports decreased by 3.5% to $ 11.93 billion in the first five months of the current fiscal year — that is from July to November—from $ 12.36 billion in the corresponding period of last year.

This indicates that the government will have difficulty meeting the export goal this fiscal year, which is certainly bad news for the economy as a whole and will lead to further income cuts for the country. It is now abundantly clear that the fluctuation of the exchange rate was a major factor in the decline in exports.

Another factor that contributed to the decline in exports from the nation was the non-payment of sales tax refunds. However, it is acknowledged that retailers all over the world have a lot of inventory because retail sales have been hurt by high inflation.

Following the floods’ destruction of exportable crops, sluggish foreign demand and domestic supply issues are also cited as reasons for the poor export performance.

In the case of Pakistan, the government’s decision to end duty drawbacks on local taxes and levies has also caused liquidity problems for the export industry. It is important to keep in mind that Pakistan not only met its export goal in the previous fiscal year (2021-22), but it also passed the psychological barrier of $ 30 billion, with proceeds rising 26.6% to $ 31.85 billion from $ 25.16 billion the year before. It is important to keep in mind that the import bill increased by 43% to $ 80 billion in 2021-2022, up from $ 56.12 billion a year earlier.

In this context, it is reported that Pakistan’s exports to nine regional countries witnessed a 1.32 percent decrease from a year ago in the first five months of this fiscal year, primarily due to a decrease in export proceeds to China.

According to a PBF official, Pakistan’s exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives total just $ 1.264 billion, or 13.22%, of Pakistan’s $ 9.56 billion in global exports during this time period.

Pakistan’s regional exports are dominated by China, with India and Bangladesh trailing behind. However, Pakistan’s exports to China experienced negative growth in the initial months of this fiscal year. China receives the majority of the regional export share, 53.66 percent, while the remaining eight nations receive the remainder.

In light of this, Pakistan’s exports to the Middle East decreased 5.57 percent year-over-year to $ 951.78 million from $ 1.008 billion in the first five months of FY23, primarily due to a significant decrease in exports to the United Arab Emirates.

According to data compiled by the State Bank of Pakistan, exports to the region showed a mixed trend, with an increase going to Saudi Arabia, Qatar, and Bahrain and a decrease going to other countries in the region.

Pakistan’s goods export decreased by 11.04 percent to $ 614.88 million from $ 691.23 million during the same time last year, putting the UAE ahead of Pakistan. The market in the United Arab Emirates receives nearly 65% of all exports to the region. Urwa further said that the country is experiencing a dollar crisis and that the economy is in a state of emergency. The current dollar shortage can only be resolved through export promotion.

Copyright Business Recorder, 2023