EDITORIAL: Export data for July-March 2023 released by the Pakistan Bureau of Statistics (PBS) as opposed to July-March 2022 shows a reversal in the trend when measured in rupees as against dollars: in rupees exports rose from 4,018,757 million to 4,952,237 million (provisional) while in dollar terms exports decline from 23,350 million in July-March 2021-22 to 21,051 million (provisional) during the period under review.
Thus depreciation played a major role in showing a rise in exports in rupee terms; however, given that export earnings form the basis of desired foreign exchange earnings for the country, the focus must remain on the reasons why there was a decline in dollar terms rather than on the rise in rupee terms.
A look at the components of the decline in exports in dollar terms would exacerbate unease amongst domestic economists. Textile exports, Pakistan’s single largest export group, earned 1.2578 billion dollars in March 2023 while in March 2022 exports amounted to 1.6252 billion dollars — a decline of nearly 23 percent.
Two factors account for this decline — (i) three items under this category rose in quantity exported notably cotton yarn, knitwear and art silk/synthetic textiles while all others itemised under this head witnessed a decline in the quantity of exports; and (ii) in spite of this increase total dollars earned declined — from 92.38 million dollars in March 2022 to 68.069 million dollars in March 2023 for cotton yarn, 425 million dollars in March 2022 to 311.4 million dollars for knitwear in March 2023 and 344.8 million dollars in March 2022 to 276.4 million dollars in March 2023 for art silk items.
Thus empirical evidence suggests that not only did the quantity exported decline other than under the three heads cited but the products for exports were commanding a much lower price in the international market, leading to lower earnings in dollars in spite of a rise in quantity of exports.
Food group exports showed a rise in both rupee and dollar terms — from 92,099 million in March 2022 to 164,972 million in rupees in March 2023 and from 512,751 thousand dollars in March 2022 to 588,760 thousand dollars in March 2023.
Rice and fish preparations rose in quantity and netted higher export earnings while fruits and vegetable exports were almost halved this year in March attributable no doubt to the devastating floods last summer. Sugar exports were zero this year against 62 million dollars earned in March last year.
Other manufactured items (including sports goods, carpets and leather items) witnessed a rise in rupee earnings — from 61,686 million rupees in March 2022 to 91,576 million rupees in March 2023 while there was a decline in dollars terms - from 343,431 thousand dollars in March 2022 to 326,621 thousand dollars in March 2023.
There was continuing containment of imports, no doubt due to the ongoing exchange restrictions — from 58,859 thousand dollars July-March 2021-22 to 43,934 thousand dollars in March 2023 (negative 25.36 decline), which lowered the trade deficit from negative 35,509 thousand dollars in March 2022 to negative 22,883 thousand dollars in the comparable period of this year though the devastating effect of import containment of raw materials and intermediate products by pushing the large-scale manufacturing sector further into the negative territory cannot and must not be understated.
There is, therefore, little optimism on the horizon for any imminent improvement in the state of the economy as there appears to be no policy under implementation with the capacity to take the economy towards sustainability through providing more job opportunities to the increasing number of unemployed who are at the same time grappling with a very high rate of inflation.
Copyright Business Recorder, 2023