Raza Khan

Exporters and experts have predicted a decline of around 10% in Pakistan’s exports during this fiscal year due to the current financial crisis. “A declining trend in exports has been observed over the last few months, which indicates a decline of around 10% in exports by the end of the fiscal year”, Shahid Sattar, Secretary General of All Pakistan Textile Mills Association (APTMA), told WealthPK. He said exports reached the highest level of $31 billion last year but things were not going well this fiscal year.

According to the Strategic Trade Policy Framework (STPF) 2020-25, the government has set the export target of $37.88 billion for the current Fiscal Year 2022-23. According to the Pakistan Bureau of Statistics (PBS), the country’s exports were recorded at $21.051 billion during the first nine months of 2022-23 as against $23.35 billion during the same period of the last fiscal year, representing a decline of 9.85%. Sattar said Pakistan could not reach last year’s target of $31 billion, what to speak of achieving this year’s target of $37.88 billion. He predicted the exports to be around $27 billion to $28 billion in 2022-23. He pointed out that there were several domestic and global issues behind the declining trend of exports.

“Pakistan’s financial crunch, especially shortage of foreign exchange, is the key issue that hurts the businesses massively”, he said.Sattar added that the export industry was under stress due to the high cost of doing business and it was also at a comparative disadvantage in respect of production cost in the region.He said other factors halting exports include unavailability of raw material due to the falling exchange reserves, increase in prices of petroleum products, currency devaluation, and global financial crisis.

Sattar said the textile sector accounts for 60% of the country’s total exports; however, this sector too had been observing a decline in exports for the last sixth months. “Drop in cotton production in Pakistan, suspension of energy package to the industry and non-opening of LCs by the banks for importing raw material dented the textile production and exports. If we don’t import raw material, we cannot export finish products”, Sattar said.

Talking to WealthPK, Sajid Amin, a research fellow at the Sustainable Development Policy Institute (SDPI), said drop in exports was not unusual, as the economies of various countries were still struggling after the pandemic.‘’The economic situation of the country and trend of decline in overall exports indicate that Pakistan will not be able to sustain positive growth in exports during the current year’’, Amin said.

“The worsening international economic situation, primarily because of the Ukraine crisis, combined with the floods in Pakistan negatively impacted the already inefficient supply chain of the country”, he said. ‘’Apart from domestic issues, demand breakdown in major markets like the US and Europe due to recession is also contributing to the decline in exports, especially textile products. This is something we really cannot do anything to control”, he added.Amin said the industry did not grow up to the level it should have been now despite getting the desired protection from the government.“The factories are being run by installing inefficient machines, which consume extra amount of energy,” he noted.

Credit: Independent News Pakistan-WealthPk