Arsalan Ali

The machinery group imports declined by 45 percent to USD3.23 billion during the first half (July-Dec) of the current fiscal year compared with the imports of USD5.91 billion during the corresponding period of the previous fiscal year, reports WealthPK. The reason behind this declining trend is primarily attributed to the limitations enforced by the State Bank of Pakistan (SBP) due to the shortage of foreign exchange and an uncertain business environment.

The consequences are not limited to a particular industry but have reverberated across all sectors, including the textile industry, which serves as the backbone of the country's economy. According to a recent report published by the Trade Development Authority of Pakistan (TDAP), the machinery group import is imperative for the advancement of the manufacturing sector.

On the contrary, during the second quarter of FY23 (October-December), the import of machinery group experienced a significant decline of 52 percent against the imports in the corresponding period of FY22. Data indicates that Pakistan imported USD1.46 billion worth of machinery in the second quarter of FY23, which is a considerable decrease from USD3.06 billion reported in the corresponding quarter of FY22.

Furthermore, all sub-sectors of the machinery group recorded a decline in import volume in Q2 (Oct-Dec) of this fiscal year when compared to the same period of FY22. Import payments of the machinery group in Q2FY23 had a negative growth rate of 17 percent in comparison to Q1 (July-September) of FY23 when it was recorded at USD1.76 billion.

According to the TDAP data, all imported machinery items registered significant decreases in the first half (July-Dec) of this fiscal year compared with the same period of the last financial year. The power generating machinery imports declined by 71 percent, office machines including data processing equipment declined by 44 percent, textile machinery by 44 percent, construction & mining machinery by 55 percent, electrical machinery & apparatus by 16 percent, telecom (mobile phone and other apparatus) by 60 percent, agricultural machinery & implements by 65 percent, and other machinery items by 34 percent.

The report highlighted that the downward trend in the import of machinery items was primarily due to the restrictions imposed by the State Bank of Pakistan (SBP) since May. The restrictions were implemented to reduce dollar outflows and protect the country's declining foreign exchange reserves as well as to curb the freefall of rupee. Even items required as raw materials for exports were subject to import restrictions.

In addition, some companies are closing their operations in Pakistan due to the current uncertain scenario, which has also contributed to a decline in the import of all machinery items, the report said. The report pointed out that the textile industry remained the single largest manufacturing sector and reduction in the textile machinery imports has hindered production and export of the textile sector.

Credit: Independent News Pakistan-WealthPk