The foreign trade statistics, released by the Pakistan Bureau of Statistics yesterday, present a mixed picture for the month of August. On one hand, worryingly, exports were down 7.1 percent over previous month and down 1.75 percent over August 2011, in dollar terms. Some solace comes from imports that were down 3.18 percent over August 2011, and only marginally up (0.63 percent) over July this year.
The fiscal-year-to-date analysis is more instructive. For the two-month period, July to August 2012 that is, both the exports and imports are reported lower relative to same period last year. Its a product of changes in both the quantities and values of the items traded with the rest of the world.
Textile remains the leading export category for Pakistan, scoring over half of the cumulative export receipts of nearly four billion dollars during the two-month period. This tally is, however, 1.5 percent lower over same period last year. Continued slowdown in key textile exporting destinations, especially the EU, and lower cotton prices owing to global surplus, have weighed heavy on textiles exports.
Within the textile group, cotton yarn exports grew tremendously in both volume and value terms compared to last year. Despite a sizable quantitative decline in cotton cloth export, its value still grew over one percent, indicating better price fetched by the exporters during the period.
A rather dismal year-on-year performance is witnessed in the value-added textiles segment. Knitwear exports fell way more in value terms compared to a small corresponding decline in their volume. The volume and value of bed-wear exports also came down in double-digit. But the exporters of readymade garments and towels shipped and earned more during the period under review.
International cotton prices have already dropped by a third from what they were in September 2011. Future outlook isn promising either. The US Department of Agriculture recently forecast the Chinese cotton imports to halve during the crop marketing year 2012-13, as the worlds top producer, importer and consumer of cotton already holds huge stockpiles to satiate its domestic and exporting needs.
Food group exports were 11.2 less than 2MFY12 in dollar terms. Except for sugar and meat, there is an all round decline in volume and value of all the food commodities. Rice exports saw massive decline during the period, thanks to the halving of Basmati rice shipments whose proceeds dropped by 38.6 percent. Rice exports are expected to remain drab till the new harvest arrives later this year.
A nearly two percent drop is seen in the countrys imports compared to 2MFY12. But in rupee terms, imports are actually 7.22 percent more during the period, highlighting the rapid depreciation of the rupee seen earlier this year.
Petroleum products import grew in terms of both volume and value, indicating increased reliance on the imported POL products. Crude petroleum imports declined in value terms, though the quantity imported showed a five percent increase over same period last year. The fertilizer imports saw a volumetric decline of 56 percent over last year, slashing its import bill to 100 million dollars, nearly a half of what it was in 2MFY12.
Pakistans trade balance is prone to price movements in key commodities, including oil and cotton. Abroad, the commodity markets response to the latest round of quantitative easing is uncertain yet, but a reversal of gloom in the Eurozone can shore up demand. At home, easing of power crisis and early, substantial headway on regional trade agreements could be a boon for the countrys export volumes.
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Selected commodities Trade data: Jul-Aug FY13
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Total Net % % chg in
Exports (mn $) chg Y/Y qty Y/Y
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Total 3,969 (3.27) -
Rice 216 (27.66) (46.18)
Cotton Yarn 329 38.35 67.68
Cotton cloth 443 1.18 (11.43)
Knitwear 385 (14.48) (2.67)
Bed wear 302 (17.49) (12.41)
Towels 126 0.54 10.17
Readymade garments 308 4.12 9.89
Imports
Total 7,346 (1.99) -
Petroleum products 1,955 13.61 12.62
Petroleum crude 837 (3.34) 5.16
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Source: PBS
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