The Balance of Payments experienced a positive shock when Pakistan experienced an increase of 28 percent in export receipts that shot up from $19.2billion in FY10 to $24.8billion in FY11.
There was an increase in the export value of all major groups; with food and the coal and petroleum group experiencing growth of 36 and 30 percent in dollar terms, respectively.
Barring tents and canvas, all textile items registered growth in exports proceeds. It is useful to note that this growth is despite a fall in the exported quantities of these commodities. This suggests that the export growth of raw cotton and cotton yarn is likely to be price driven with little contribution from the increase in the quantity of goods exported.
The upward trend in cotton prices, with an average increase of 106 percent from last year, (from 158cents/pound in FY11 to 76cents/pound in FY10) also supports this observation.
Other than the decline in the exported quantities of raw cotton and cotton yarn; there has been a significant increase in the quantities of major value added items including cloth, knitwear, readymade and silk and synthetic textiles. The increase in readymade garments was not only due to an increase of 20 percent in the exported quantity; but also because of the $3/dozen increase in price (from $46 to $49 per dozen). Similar price and quantity driven growths were seen in important commodities like bed wear and knitwear.
Cotton prices have been falling since the start of the calendar year. To ensure net positive growth in the exports, an increase in cotton production is required to balance the negative impact of falling cotton prices. Since production is expected to increase owing to the low probability of floods this year, one can be hopeful about the export situation for the FY12. However, with the country facing major energy crisis that is affecting the output of the textile industry, the sustainability of this trend remains questionable.
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