The caretaker government is seen setting ambitious targets these days. First, the government announced that the country will attract $60-70 billion foreign direct investment over the next 3 to 5 years. And then the IT export target is set at $15-20 billion in the next three years, with $10 billion investments to brought to Pakistan in this sector under the Special Investment Facilitation and Consultation Council. Going from $2-2.5 billion annual exports over the last two years to $15 billion over the next three years is sure an uphill task. And not only that; the socio- economic conditions, industry dynamics, political unrest and the global economic situation currently leave little hope for meeting even half of what is being proclaimed.
Nevertheless, the country’s IT sector exports have seen some respite in August 2023. The sector exports for the month were seen rising by 10 percent month-on-month to $235 million, while the year-on-year growth for August-23 stood at three percent. Segment-wise, Telecom and Computer Services exports increased by 12 percent and 9 percent month-on-month, respectively. Among Computer Services, Hardware and Software Consultancy exports up 21 percent and 18 percent month-on-month, respectively.
The main factor behind higher exports on a month-on-month basis as per the market was the higher number of working days in the month, which meant higher clearing days through the banking channels, and thus higher inflow. This rise in monthly exports was also witnessed in non-IT exports where services exports excluding IT sector grew by 14 percent month-on-month.
Though the month-on-month growth in August-23 was primarily due to higher number of working days during the month compared to July-23, the export inflows during the month were better than last 12-month average of $218 million.
The flattish growth of three percent on a year-on-year basis was primarily due to the Computer Services that grew by only one percent year-on-year and accounts for around 80 percent of the total exports with Telecom representing the remaining 20 percent. Telecom exports were up by 11 percent year-on-year, which is reportedly due to money remitted back to Pakistan by technology companies – still a greater amount is being retained out of the country by these technology companies due to the currency volatility and the economic turmoil in the country.
Overall, IT sector export in 2MFY24 increased by 5 percent year-on-year.
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