The country's exports in last financial year grew by , better-than-expected 11 percent, aided by higher textile shipments, but the trade deficit, which ballooned was worrisome for the economic managers as it would put immense pressure on the country's foreign exchange reserves.
Exports rose to $ 12.3 billion in the 12 months up to June from $ 11.1 billion a year ago, sources at the Federal Bureau of Statistics said. The government had estimated a 10 percent increase.
Imports rose by 26 percent to $ 15.5 billion and the trade deficit widened to $ 3.2 billion from $ 1.1 billion of previous year, according to figures prepared by the Bureau.
Imports figures during the fiscal year exceeded the full year target on the back of increase in import of machinery, metals, agricultural and chemical products.
Imports in food group showed nominal increase because of rise in palm oil and tea shipments. The rise in steel prices and import of aircraft, ship and boat, which is expected to show an increase of 500 percent, increased the import bill and widened the trade deficit by the huge margin.
Pakistan is seeking to raise exports to revive an economy damaged by war in neighbouring Afghanistan. The central bank cut interest rates on export finance six times since November 2002 to 1.5 percent from 13 percent.
The State Bank of Pakistan, the central bank, cut its discount rate to a record 7.5 percent in November 2002 to spur economic growth and exports. Since then, treasury bill yields have fallen by more than 5 percentage points, with benchmark one-year treasury bills trading at 2.70 percent.
The exports recorded growth because of textile products which come about 66 percent of the total export. The decrease in export finance and flexibility in prudential requirements were the major reasons, which enabled the textile manufacturers to meet up their short term financing requirements. Moreover, some organisations have better access to the EU and the US markets either by having joint ventures or by opening their liaison offices in the foreign countries.
Pakistan's trade policy, to be announced later this month, will contain a plan to boost exports in the financial year that began on Thursday, the government said.
Exports may grow 10 percent in the current financial year, boosted by government incentives to increase textile production, including duty-free import of machinery and a cut in taxes to import raw material, an analyst said.
The trade policy will also seek to prepare exporters for a quota-free regime as Pakistan gets ready to enter the World Trade Organisation next year, diversify exports and find new destinations for goods made in the country.
Last year, the trade deficit widened as several textile mills imported machinery to expand and improve their products and Pakistan International Airlines bought Boeing aircraft to regain market share.
Comments
Comments are closed.