December 2023 goods’ exports surged to $2.8 billion – breaking the string of low export earnings – recording the highest in 18 months. This ranks third on the list of highest-ever monthly export earnings. More than the value, it is the composition of exports that makes for an interesting reading.
Barring the peak-Covid month of April 2020, where industrial activity was almost at a standstill – December 2023 is the first time in at least 15 years that textile’s share in exports has dipped below 50 percent. For context, textile’ share in total goods’ exports since 2011 has been an average 60 percent. Of course, one month is not a trend, but looking at 1HFY24 numbers, a trend does seem to be appearing – where textile share at 55 percent is the lowest in 10 years.
This marks a very rare occasion in Pakistan’s trade history when overall exports show positive growth despite decline in textile earnings. Textile exports dipped 5 percent year-on-year – with major categories from knitwear to readymade garments posting a decline, that is largely driven by a sharp reduction in unit values. Export quantities, on the other hand, have registered modest growth year-on-year, but multiyear low unit values have dragged overall exports down for the key textile categories.
The biggest dip in unit values is seen in knitwear segment – with a decline of 38 percent year-on-year during 1HFY24, followed by readymade garments, where average unit value of export has dipped to $3.1 per piece – down 15 percent year-on-year. The ratio of readymade to knitwear unit export price has gone down by a third from a 10-year average of 3x to 12-month moving average of 2x – indicating Pakistan’s value-added exports may well be fetching lower-end segments than earlier.
On the other end of the spectrum, food group is singlehandedly keeping exports alive – having registered a remarkable 50 percent year-on-year growth during 1HFY24. At 30 percent share in total exports in December 2023, this is the highest monthly contribution by the group ever, barring April 2020. The march is led by rice exports – which went up 48 percent year-on-year in quantity terms at 2.5 million tons, the highest–ever half-yearly number. Rice export unit value also jumped 19 percent to $637/ton – taking the 1HFY24 exports to $1.6 billion – up 77 percent year-on-year.
Overall exports were higher by $0.7 billion during 1HFY24 in absolute terms – whereas rice alone added $0.7 billion to the export tally in the period, more than making up for the $0.4 billion loss in textile export earnings. Pakistan’s goods’ exports are well on way to cross $30 billion in FY24 – only for the second time in history. Much will depend on how the upcoming government deals with energy price and currency.