SBP sees exports three percent decline in fiscal year 2012 exports

The State Bank of Pakistan is expecting a decline of some 3 percent in the country's export during the current fiscal year mainly due to fall in cotton prices and energy shortage. The country's exports have posted a nominal Year on Year growth of 3.6 percent during July-December FY12 compared to an impressive growth of 18.7 percent in the corresponding period last year.
"A combination of sustained growth in imports and deceleration in exports caused the trade deficit to increase by 38.4 percent YoY during first half of FY12," the SBP revealed in its first quarterly report. The increase in the imports was largely driven by rise in petroleum and fertiliser imports as both quantum and prices rose. Exports on the other hand, decelerated principally due to declining quantum of textiles, it added.
"Given the falling cotton prices, persistence in the energy shortages and poor law and order situation, the deceleration in the exports is likely to continue in the remaining months of FY12 and SBP expects the exports to shrink by around 3.0 percent during the current fiscal year," the report said.
The decline in export growth is largely attributed to fall in textile exports. Textiles, that contributed more than 73 percent to last year's export growth, had a negative contribution this year, though this was largely offset by positive contributions made by overall food and other manufactures groups, it added.
Within the food and other groups; fish, fruits & vegetables, footwear, medical & surgical instruments, chemicals & pharmaceuticals registered a significant rise over the previous year. Exports of rice, carpets and petroleum products, however posted decline, the report said.
Imports continued to rise during second quarter of FY12 registering a YoY growth of 14.8 percent. This rise in import bill was a function of increase in import prices of almost all products, whereas quantum of imports fell during the period. Among imports highest contribution in this growth came from the petroleum group followed by agricultural, other chemical group and machinery.
Commodity-wise data shows that import of fertiliser witnessed the highest YoY growth in second quarter of FY12. Specifically, fertiliser imports increased by 286.3 percent to $202.0 million due to both higher prices and increased quantity. The country was compelled to import urea due to decline in domestic production of fertiliser due to gas shortage, which led to increase in fertiliser imports.
Petroleum products imports increased by 24.1 percent during second quarter of FY12 over the same period last year. In absolute terms, POL imports increased by $2.1 billion, out of which $2.0 billion was due to price impact. However, in terms of quantum, petroleum imports recorded a decline during Q2FY12 after registering a rise in Q1FY12.