Amir Khan

Pakistan’s merchandise exports experienced a significant increase of 11.83% in the first month (July) of the current fiscal year 2024-25, climbing to $2.31 billion from $2.06 billion over the same month last year, according to the latest data released by the Pakistan Bureau of Statistics (PBS).

Despite this year-on-year growth, a month-on-month comparison reveals a different story, with exports declining by 9.77% in July compared to June 2024. For the fiscal year FY24, Pakistan's exports grew by 10.54% to $30.64 billion from $27.72 billion in FY23. This growth was consistent from July 2023 until January 2024, when exports turned negative. This downward trend continued until April. However, the trend reversed in May, with growth resuming and continuing into June. Pakistan’s export sector peaked in the fiscal year 2021-22, achieving an unprecedented $31.78 billion value. The subsequent year, however, saw a decline, with exports dropping to $27.54 billion. While exports have shown resilience, the trade gap has widened significantly. In July 2024, the trade deficit expanded by 19.71% to $1.95 billion from $1.63 billion in the same month last year.

This was due to a substantial increase in imports, which grew by 15.30% to $4.25 billion in July, up from $3.69 billion in the same month last year. Month-on-month, however, imports declined by 14.27%. Moreover, for FY24, the total imports slightly decreased by 0.84% to $54.73 billion from $55.19 billion in FY23. Consequently, the trade deficit for FY24 narrowed to $24.08 billion from $27.47 billion the previous year. The July 2024 export data highlights a mixed performance, reflecting broader economic challenges. While the year-on-year growth suggests a positive trajectory, the month-on-month decline indicates volatility in the global market and domestic economic conditions. The drop in exports from June to July highlights the fragility of the export sector, which has been battling a series of economic headwinds, including fluctuating global demand, supply chain disruptions, and domestic economic policies.

In response to the export sector's concerns, the government has indicated a willingness to engage with exporters’ associations to address their issues. Efforts are underway to balance necessary fiscal measures and maintain export competitiveness. Pakistan’s export sector showed remarkable resilience with a notable increase in the first month of the new fiscal year (FY25). However, the widening trade deficit and concerns over the new tax measures present challenges that need to be addressed to sustain this growth. The government’s proactive engagement with exporters will be crucial in navigating these challenges and ensuring a stable economic environment conducive to sustained export growth.

Credit: INP-WealthPk