Trade statistics: no ray of hope

Trade data released by FBS for 6MFY12 showed a continuation of the disturbing trend of falling volumes in Pakistans major export group - textiles. In the textile group, most of the categories depicted a decline in exports during 1HFY12 relative to 1HFY11. With prices of most of the finished products in the category, such as cotton cloth, knitwear, bed wear, towels and tents increasing; the slump in exports was lead mainly by a volumetric decline in this category this year relative to the previous fiscal year. However, export prices of raw cotton and cotton yarn plummeted considerably in 1HFY12 over 1HFY11 and also in December 2011 over December 2010. Given that the impact of falling cotton prices will likely reflect in the prices of finished goods after a lag of about three months, going forward no respite will be offered to the exports of finished goods once prices of the same start coming down. Similarly, for rice, another key export commodity for Pakistan, net exports for 6MFY12 declined relative to the same period last year. Again, while prices of Basmati and the other rice categories rose, quantities exported of the same declined, explaining the fall in rice exports this fiscal year. Amongst the few categories that showed both a volumetric and price-based increase in 1HFY12 versus the same period last year were fish and fish preparations and leather gloves. Overall, exports increased marginally by four percent during July-December FY12 over the same period last fiscal year. On the imports side, prominent categories worth mentioning are palm oil and petroleum and related products. Prices of the two rose considerably during 1HFY12, with the average per unit price during 1HFY12 rising by nearly 30 percent for palm oil, and 35 percent and 48 percent for petroleum products and crude petroleum, over the same period last year. The quantities imported of these also increased, although that of crude petroleum decreased, showing the increasing reliance on refined petroleum products as opposed to refining crude oil. Interestingly, an increase in fertilizer imports was witnessed in this period, rising by roughly 37 percent in quantitative terms during July-December FY12 versus the same period last year. Overall, imports increased by nearly 19 percent in 1HFY12 relative to 1HFY11. These numbers reflect on the unhealthy growth in imports and stunted growth in exports. While the former is expected to increase even further, thanks to expectations of rising oil prices, the latter will likely remain subdued, with prices of major finished products of the textile also expected to begin falling in the near future. In fact, with economic slowdown anticipated in European countries, a volumetric increase in exports seems like a far-fetched idea.

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SELECTED TRADE COMMODITIES: JUL-DEC FY12, Y/Y %CHG
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                 Total $    Quantity   Monthly avg
                   value                unit price
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Exports
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Rice                 -11       -33              33
Raw cotton            -4        -4              -7
Cotton yarn          -21       -13              -3
Cotton cloth           3       -11               8
Knitwear              -5       -22               9
Bed wear              -7       -22              32
Towels                -2       -12              31
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Imports
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Palm oil              36         6              29
Petroleum products    52        14              35
Petroleum crude       19       -18              48
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Source(s): FBS, BR Research
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