Exports dwindle

The V-shape did not last long. Exports in August 2020 were down 15 percent year-on-year and 21 percent month-on-month. Monthly exports of $1.58 billion are very much a part of the post-pandemic world, making July exports of $2 billion look like an aberration. That said, textile has still held its ground rather firmly, recovering sharply from the April lows of a mere $0.4 billion. Textile exports now constitute 64 percent of total exports in 2MFY21 – up from the historical average of 58 percent. This is not necessarily a good or a bad thing in itself, as there are multiple factors at play.

There is no denying April and May export numbers will continue to have a bearing for a long time but let us not forget that exports were not exactly ready to hit the roof and beyond before Covid hit. There was undoubtedly some good progress on textile quantity front though, which has been halted to a great extent.

The leading textile contributors in readymade garments, knitwear and bedwear have shown meager year-on-year growth in value terms. The quantities of all major exporting items except towels, have gone down in high double digits. The unit price for readymade garments has gone up considerably, which may well be an indication of Pakistan tapping into a higher end market, filling the vacuum. This could well translate into repeat business once the dust settles on Covid, as it clearly shows Pakistan does have the capacity to venture into higher end segments. The detailed 8-digit HS code data will surely explain things in greater detail than what one infers now.

The biggest dent on exports in August 2020 came from food exports, which were recorded at the lowest since at least August 2016, shrinking 20 percent year-on-year. August saw the lowest 5-year monthly rice exports, and the downturn was visible in both the flagship Basmati and other rice categories. Other food export categories such as fruits, vegetables and fish also showed visible drop.

While Pakistan was showing promising signs at the beginning of 2020, with quantities, particularly for textiles, reaching their all-time highs, the ongoing pandemic has thrown the spanner in the works. The WHO has clearly warned of Covid cases reaching alarming levels, with no signs of abating anytime soon. Europe has started to see another fresh wave of resurgence in the outbreak and the USA never really flattened the curve. These are Pakistan’s main export destinations and a return to normalcy may take longer than was previously anticipated.