June closed on FY12s trade figures with a hint of a caveat for FY13: the countrys exports of textiles, the leading export group, declined by over five percent on a month-on-month basis. This decline is indicative of the trend to come as far as exports in this group are concerned, as slowing global growth, particularly in areas such as the euro zone which are strong markets for Pakistans textile exports, is expected to hurt local exports. Raw cotton exports were particularly hard-hit in June, with a net month-on-month decline of about 86 percent, led by a whopping 83 percent decline in quantity exported relative to the previous month. According to the International Cotton Advisory Committee, global cotton trade may decline by as much as 18 percent in 2012-13, as China, the worlds biggest cotton consumer, holds large stocks of the commodity and its imports are projected to fall by almost half in 2012-13. Consequently, cotton prices are not expected to remain robust either. Even net exports of cotton yarn and cotton cloth saw a month-on-month quantity-led decline, though those of value-added products, such as knitwear, bedwear, readymade garments and towels increased relative to May FY12. Overall, in FY12, significant decline in quantities exported in value-added textile products was a key feature, with an average year-on-year decline of about 20 percent for the key categories mentioned in the previous paragraph. Exports of rice, on the other hand, also showed a significant month-on-month volume-led decline in June, particularly for the non-Basmati variety. This came at the heels of a dwindling domestic stock of rice towards the end of the season. Rice trade is expected to remain slow in the coming few months as well, until the new crop is harvested at around coming October. In FY12 as a whole, too, rice exports fell over 10 percent on a year-on-year basis, with those of the Basmati variety declining even more in terms of volumes, thanks to increased competition from Indian Basmati rice in FY12. Going forward, a firm price trend is expected for most rice varieties, though global demand for the commodity may remain lackluster for the next few months. Overall, a five percent year-on-year decrease in exports was seen in FY12, with the years tally clocking in at dollars 23.6 billion. The imports, meanwhile, increased 11 percent relative to FY11, round off with net imports of about dollars 45 billion. Increases in both quantities and prices of petroleum imports explain this increase majorly, with an 18 percent year-on-year increase in the quantity of petroleum products imported. At the same time, crude petroleum imports decreased by 20 percent on a year-on-year basis in FY12, indicative of an increased reliance on the finished product and inefficiency on part of the refineries. A key feature of FY12 were also fertilizer imports, with the quantity bought home nearly double the levels seen in FY11, as extended gas curtailment hampered the local fertilizer production. Going forward, one is hopeful of decreasing global oil prices to ease the import burden of the country in FY13, though how far this materializes remains to be seen. Overall, trade in FY13 is expected to remain dull due to the slowdown seen in key international economies, and this will likely be reflected in slowing exports as well as a marginal decrease in imports in the year to come.
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Selected commodities trade data: full year FY12
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Total Net % % chg in
(mn $) chg Y/Y qty Y/Y
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Exports
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Total 23,641 -5 -
Rice 2,061 -5 -10
Raw cotton 462 27 78
Cotton yarn 1,795 -18 7
Cotton cloth 2,455 -6 -16
Knitwear 1,974 -14 -22
Bed wear 1,748 -16 -19
Towels 684 -10 -17
RMG* 1,634 -8 -26
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Imports
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Total 44,912 11 -
Petroleum products 10,287 41 18
Petroleum crude 4,960 3 -20
Fertilizers manufacture 1,186 121 102
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* readymade garments Source: PBS
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