Current account surplus points to possible contraction: FPCCI

KARACHI: President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Irfan Iqbal Sheikh has said that current account surplus in Pakistan for March 2023 is no reason to celebrate; in fact, it reveals a massive economic contraction.

Declining imports mean lesser industrial exports in the months to come and even lower capacity to make timely repayments on external loans, he added.

Referring to latest trade statistics for nine months of the outgoing fiscal, i.e. July 2022 to March 2023, he said that textile exports have shrunk by 12.4 percent to $12.48 billion and IT & ITeS industry’s export remittances by 0.5 percent to $1.94 billion as opposed to 47 percent average growth in IT & ITeS posted for two consecutive years, FY21 and FY22.

As far as the total exports in Q1-Q3 FY23 are concerned, Irfan Sheikh pointed out that they stand at $21.046 billion as against $23.35 billion in the same period of last year. “We have exported $2.304 billion lesser this year, which reflects a 10 percent decline, and it is difficult to understand what the government’s economic team is celebrating after achieving current account surplus through contractionary, regressive and recessionary measures,” he added.

“The incremental downslide registered in export proceeds for the third quarter of FY23 is specifically alarming as it indicates an even abysmal export performance in the fourth quarter, i.e. April 2023 to June 2023, as the mainstay of Pakistani exports, textiles, declined by a whopping 22.6 percent in March 2023,” said the FPCCI chief.

“We are perhaps heading towards an uncharted territory of unprecedented economic contraction, even in comparison to Pakistan’s rather battered economic history.”

He reiterated his stance that the only way forward to avert the total unravelling of the country’s social, economic and political fabric is to protect trade and industry to keep revenues, exports and employments afloat. The FPCCI had time and again offered its unconditional support to the government in this regard.

“We feel our responsibility in the broader national interest, but the dialogue on the national economic agenda and strategy for the next 15 years has to be conducted through an effective, inclusive and egalitarian process with the business community,” he added.

To start such a consultative process, Irfan Sheikh proposed a four-legged approach: (i) swiftly formulate a mechanism to protect exports; (ii) chart out a post-IMF deal plan for stabilising the economy with stipulated measures; (iii) discuss broadening of tax-base supplemented with simplification of the taxation system; and (iv) discuss sector-wise budgetary proposals for FY24.

Copyright Business Recorder, 2023