The year-on-year decrease in Pakistans exports has become common knowledge. At $21.5 billion, the countrys exports during July-May 2012 were nearly 4 percent less than the net exports during the same period last year. Much of this decrease has been brought on by a reduction in volumes of exports rather than prices. Take the case of rice, which holds a share of 8-9 percent in terms of net exports. An over 20 percent reduction in the quantity of Basmati rice and a smaller 2 percent in that of the other category were seen during 11MFY12 relative to the same period of last year. With India lifting its 3-year-export ban on a few varieties of rice since September 2011, the ensuing competition in international markets could explain the volumetric decline in rice exports from Pakistan. Prices, on the other hand, remained firm, especially for the non-basmati variety, with a noticeable spike seen in May in particular, explained plausibly by pre-Ramazan buying by Middle Eastern markets. Overall, though, net rice exports decreased on a year-on-year comparison. The mother of all export categories - textile and related products with a net share of about 52 percent in the exports of Pakistan - showed a similar volume-led decrease in exports during 11MFY12. Overall exports of the textile group fell by around 10 percent during July-May FY12 vis-à-vis the same period of last year. With the exception of raw cotton, most value-added textile products witnessed significant dips in quantities exported, including knitwear, bed wear, towels and readymade garments. Whats heartening, however, is that in the last few months, the volume of value-added textile products exported has improved, while average per unit prices have also firmed up. Per unit prices of raw cotton appear to be on the decline in the last few months, in line with the slide in commodity prices seen globally. Interestingly, quantities of raw cotton exported declined by a whopping 63 percent in May on a month-on-month basis. Where exports of Pakistan have been affected stagnancy at best, imports continue with their soaring spree. During July-May FY12, imports increased by 12 percent on a year-on-year basis to round up at $41 billion. Net imports of petroleum products were increased by over 50 percent during 11MFY12 on a year-on-year basis, led by both an increase in quantity and price. International oil prices had towered considerably during FY12. Though they started receding recently, the decline will be noticeable on Pakistans imports after a lag. Overall, the picture for FY12 is likely to wind up in June with the stark decline in export volumes. Going forward, however, some respite may be offered with the granting of concessions through tariff-free export of 75 textile products to the EU and the likelihood of decreasing international oil prices. Yet, concerns remain regarding a possible slowdown in the global economy and the consequent reduction in export demand.
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