Decline in exports

According to data released by the Pakistan Bureau of Statistics (PBS), exports fell to 3.84 billion dollars in July-August 2014 against 4 billion dollars last year - a decline of 5.8 percent. This statistic should be a source of serious concern to the government as well as those that are being held responsible for a decline in productivity and exports namely the Pakistan Tehreek-e-Insaf and the Pakistan Awami Tehreek whose one month sit-ins in Islamabad have compromised our exporters' meetings with foreign clients for new contracts as well as transport of goods to upcountry areas leading to piling up of inventories.
The question that begs a response is what factor(s) - political or otherwise - can be held responsible for the decline in exports with urgent remedial measures required to be identified and implemented to arrest this decline. According to Hafiz Pasha-led think tank Social Policy and Development Centre, exports in 2013-14 declined each month with the exception of July, December, January and February and "the entire increase in 2013-14 (July to May) was largely a result of increase in exports during December when exports increased by 26 percent that occurred on account of export of rice." While total food group exports increased marginally by 0.7 percent between 2012-13 and 2013-14 - rice exports were the major contributor to the increase - from 1.59 billion dollars to 1.85 billion dollars. Wheat exports declined by 86.8 percent, sugar by 36.8 percent, vegetables by 12.4, tobacco by 5.5 and spices by 19 percent during the same period.
Other manufacturers (other than food and textiles) declined from 3.9 billion dollars to 3.58 billion dollars (9 percent decline) with gems and jewellery declining by 72 percent and cement by 11.5 percent.
Textile exports, however, increased from 10.7 billion dollars between July-April 2012-13 to 11.4 billion dollars in 2013-14 (with the largest increase in bed wear exports - from 1.46 billion dollars to 1.76 billion dollars - followed by knitwear - from 1.66 billion dollars to 1.8 billion dollars.) Increase in textile exports is, no doubt, mainly attributable to the grant of the GSP plus status by the European Union (EU) to Pakistan effective from January 2014 - a package that came under EU consideration after the devastating 2010 floods with the then government led by Asif Ali Zardari requesting trade and not aid as part of the EU's relief efforts. The package was constantly delayed due to opposition by other countries including India and Brazil that is allowed under the World Trade Organisation rules.
The reasons for a decline in exports in 2013-14 in comparison to the year before were threefold. First exporters had expressed concerns over the government's decision to keep the rupee-dollar parity within certain limits as it would make Pakistani goods more expensive relative to good produced by competing countries. The government's rationale was to reduce the foreign indebtedness in rupee terms as well as reduce the import bill. Be that as it may, exports are a valuable source of foreign exchange (other than remittances) and are a reflection of macroeconomic stability that would thereby reduce the country's heavy dependence on external debt. In other words, the rupee should be allowed to bet set at its market as opposed to nominal value. The energy crisis as well as the security situation also continued to impact negatively on productivity and exports.
However, textile exporters in particular have expressed serious concerns lately that the ongoing dharnas in the federal capital are compromising their capacity to meet with their clients who have begun to look at competing countries to fill their orders. Once a client is lost then it is extremely difficult to get him back, exporters informed a survey team of Business Recorder. In this context, there is an urgent need for the government, PTI and PAT to reach an agreement and end the dharnas as soon as possible. It is inappropriate to celebrate the one month sit-ins as announced by the PTI leadership and, at the same time, denigrating the dharna leadership by senior members of the executive is compromising the success of the negotiators. One would hope that the two sides see reason and compromise to reach a speedy resolution to the conflict.