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EDITORIAL: Export data for July-March 2023 released by the Pakistan Bureau of Statistics (PBS) as opposed to July-March 2022 shows a reversal in the trend when measured in rupees as against dollars: in rupees exports rose from 4,018,757 million to 4,952,237 million (provisional) while in dollar terms exports decline from 23,350 million in July-March 2021-22 to 21,051 million (provisional) during the period under review.

Thus depreciation played a major role in showing a rise in exports in rupee terms; however, given that export earnings form the basis of desired foreign exchange earnings for the country, the focus must remain on the reasons why there was a decline in dollar terms rather than on the rise in rupee terms.

A look at the components of the decline in exports in dollar terms would exacerbate unease amongst domestic economists. Textile exports, Pakistan’s single largest export group, earned 1.2578 billion dollars in March 2023 while in March 2022 exports amounted to 1.6252 billion dollars — a decline of nearly 23 percent.

Two factors account for this decline — (i) three items under this category rose in quantity exported notably cotton yarn, knitwear and art silk/synthetic textiles while all others itemised under this head witnessed a decline in the quantity of exports; and (ii) in spite of this increase total dollars earned declined — from 92.38 million dollars in March 2022 to 68.069 million dollars in March 2023 for cotton yarn, 425 million dollars in March 2022 to 311.4 million dollars for knitwear in March 2023 and 344.8 million dollars in March 2022 to 276.4 million dollars in March 2023 for art silk items.

Thus empirical evidence suggests that not only did the quantity exported decline other than under the three heads cited but the products for exports were commanding a much lower price in the international market, leading to lower earnings in dollars in spite of a rise in quantity of exports.

Food group exports showed a rise in both rupee and dollar terms — from 92,099 million in March 2022 to 164,972 million in rupees in March 2023 and from 512,751 thousand dollars in March 2022 to 588,760 thousand dollars in March 2023.

Rice and fish preparations rose in quantity and netted higher export earnings while fruits and vegetable exports were almost halved this year in March attributable no doubt to the devastating floods last summer. Sugar exports were zero this year against 62 million dollars earned in March last year.

Other manufactured items (including sports goods, carpets and leather items) witnessed a rise in rupee earnings — from 61,686 million rupees in March 2022 to 91,576 million rupees in March 2023 while there was a decline in dollars terms - from 343,431 thousand dollars in March 2022 to 326,621 thousand dollars in March 2023.

There was continuing containment of imports, no doubt due to the ongoing exchange restrictions — from 58,859 thousand dollars July-March 2021-22 to 43,934 thousand dollars in March 2023 (negative 25.36 decline), which lowered the trade deficit from negative 35,509 thousand dollars in March 2022 to negative 22,883 thousand dollars in the comparable period of this year though the devastating effect of import containment of raw materials and intermediate products by pushing the large-scale manufacturing sector further into the negative territory cannot and must not be understated.

There is, therefore, little optimism on the horizon for any imminent improvement in the state of the economy as there appears to be no policy under implementation with the capacity to take the economy towards sustainability through providing more job opportunities to the increasing number of unemployed who are at the same time grappling with a very high rate of inflation.

Copyright Business Recorder, 2023

Comments

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Tulukan Mairandi Apr 26, 2023 09:38am
Because nobody wanna import from a country with looming famine and default
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Tariq Qurashi Apr 26, 2023 12:27pm
Increasing our exports is the only long term solution to our financial crisis. However the difficulties of importing raw materials and spare parts, the high input costs in terms of the cost of electricity and gas, as well as the unnecessary red tape associated with producing and exporting goods and services is acting like a time-bomb on our export industries. Most of our factories are working at reduced capacity, and many have closed down. We need to understand that once a factory closes down it is unlikely that it will open again. We are going through a deindustrialization process, which must be arrested by all means. Export industries are the lifeblood of the nation, and LC's must be opened on a priority for raw material and spare parts for these industries to keep them running. Just letting these industries rot, will cause us untold misery in the future. Someone in Government needs to wake up before the ship sinks below the waves!
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Joe Apr 26, 2023 01:30pm
No rocket science...crooks and corrupt Inc sponsored by the apolitical is the reason!
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Naseem Apr 26, 2023 04:09pm
@Joe, The dilemma is that the dumb and dumber think they are smart.
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Muhammad Ali Apr 26, 2023 04:19pm
No rule of law & instability is core reason of loss of confidence in Pakistan. PEEDM wants to retain power at cost of existence even.
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nadeem ibrahim Apr 26, 2023 04:43pm
the reason is simple the more you devalue more you loss in terms of foreign exchange.
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Az_Iz Apr 26, 2023 06:07pm
Textile industry which got billions of cheap loans under TERF need to deliver more. No excuses, no subsidies.
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Az_Iz Apr 26, 2023 06:07pm
Exports has brought prosperity to so many countries.
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test1 Apr 26, 2023 07:11pm
@Joe, Who got 10 million (1,00,00,000) jobs and 5 million houses (50,00,000) ? No one. Did corruption ended ? No. Pakistan Passport Ranking improved ? No Industry relocated to Pakistan ? No Did he bring covid drama to Pakistan ? Yes How many ministers in his cabinet were dual nationals ? Plenty of. So one thing should be clear to all and everyone and that is you have no value its the elite class who has all the value. They will always fight for chair no matter who is in opposition and who is in govt. It's all about elite class which include politicians, generals, judges, businessmen, policy makers, media houses etc.
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Awami Apr 27, 2023 01:45am
@Tariq Qurashi, Is free trade harming ? Other nations with free trade even export things which used to be produce earlier. Free trade should lead to both way trade. If it is mostly majority importing business then free trade is harming.
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Sumroo Apr 27, 2023 04:05pm
@test1, looks like a sponsored comment... Indeed little knowledge is dangerous...just walk a block in your neighborhood without getting mugged...and you will discover the truth about state of affairs!
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