Pakistan''s exports to regional countries declined partly due to a slowdown in China''s growth rate and partly due to souring relations with India that account for declining exports to India and Afghanistan. An analysis of top ten export markets of Pakistan for FY 2016 shows that Pakistani exports share to the US increased from 15 percent in 2014-15 to 17 percent in 2015-16 whereas exports to China as a percentage of our total exports declined from 9 percent in 2014-15 to 8 percent in 2015-16.
Afghanistan which was Pakistan''s major trading partner, has now turned towards India and figures show that Pakistan''s exports to Afghanistan as a percentage of total exports declined from 8 percent in 2014-15 to 7 percent in 2015-16. Exports to the UK increased to 8 percent from 7 percent whereas exports to Germany, France, Bangladesh, Italy and Spain remained stagnant.
Pakistani exports lack market diversification as more than 50 percent of exports rely on only six markets (the USA, China, Afghanistan, the UAE, the UK and Germany). Trade potential remained under-exploited in the regional markets which are deemed to be the natural extension of domestic market.
"A major factor constraining Pakistan''s exports growth has been the slowdown in the economies for our major importing partners - China and the EU. China experienced lowest growth over the last 25 years. The demand for consumer items from Pakistan like seafood and leather products has also declined as the overall Chinese economy weakened," the sources added.
Strategic Trade Policy Framework (STPF) envisages exports enhancement to $35 billion by 2017-18, a target that, according to independent economists, is a pipedream. Commerce Ministry is also facing hardships in finding competent officials who may be able to help develop a viable strategy to increase exports. The government recently announced Rs 180 billion incentives for exporters of several commodities.
Officials in Commerce Ministry toldBusiness Recorder that security situation, lack of international competitiveness, outdated machinery and processes, weak contract enforcement, inadequate investment growth and constraints in regional markets are the oft-repeated reasons for a decline in exports.
According to the Ministry, there are 4 Cs in the export crisis which are as follows: (i) contraction- global merchandise trade shrank 13 percent in 2015 (from $19 trillion to $16.5 trillion); (ii) commodity- price drop, cotton 21.2 percent, Basmati, 21.3 percent, China''s policy, yarn and cotton stocks offloaded leading to a price drop, cotton crop failure in Pakistan (5 million bales shortfall); (iii) currency- Indian Rupee 7 percent, Chinese Yuan 8 percent, South Korean Won 10 percent, Thai Baht 11 percent, Sri Lankan Rupee 12 percent, Euro 20 percent and Brazilian Real 51 percent; and (iv) low ranking in global index of competitiveness - 126th out of 140, increasing costs, minimum wage, tariffs, liquidity crunch and energy costs.
Export of the agricultural commodities declined by 13.7 percent during the year 2015-16 as compared to 2014-15, the total proceeds from the agricultural commodities remained above $4 billion. The main reason for decline in exports of commodities is the global commodity crisis. The prices of cotton in the global market have declined by 10% from 70 cents/lb in 2014-15 to 63.5 cents/lb in 2015-16. Pakistan''s exports have declined by 3.21 percent to $11.685 billion in July-January 2016-17, while imports touched an all-time high of $29.113 billion or 13.65 percent during the period.
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