Road to recovery
Pakistan has set a new export record in 2010-2011 by attaining a figure of $24.827 billion according to the Federal Bureau of Statistics. This amounts to a 28.7 percent increase compared to $19.29 billion recorded in the last financial year. This robust growth in exports and stable exchange rate is also backed by a phenomenal increase in foreign remittances. Furthermore, despite the economic downturn in Europe and the US, Pakistan is on course to deliver an even higher export performance in the next fiscal year.
In terms of the improving textile exports performance, the main reason is the increasing price of textile products in the international market and the increasing international competitiveness of local textile products. An analysis of Pakistan’s highest top 10 export value products during July 2010 to April 2011 shows that the main driver of this impressive export record was the textile sector which earned nearly $11.18 billion, showing 32.37 percent growth. The agriculture and food sector exported produce worth $1.7 billion with a growth of almost 91.19 percent as compared to the corresponding period in the last financial year. Minerals and metals, engineering goods and leather products registered a growth of 32.92 percent, 16.98 percent, and 25.95 percent, respectively. Other important export items included bedwear, readymade garments, rice, petroleum products, raw cotton and towels. However, it is feared that the country may not be able to maintain the current pace in export growth in financial year 2012 as the price of cotton has started declining in the international market which could adversely affect textile products.
According to the Federal Bureau of Statistics (FBS) and the Trade Development Authority of Pakistan, textile exports grew by 30.38 percent from July 2010 to March 2011. While some of this increase can be attributed to the rise in the international price of cotton and other inputs, Pakistan’s exports have increased significantly in terms of quality as well. This reflects on the increased demand for Pakistani textile goods in Europe and the US, where buyers are willing to pay higher prices for Pakistani textiles and are also buying more of them. This is a very good sign for the Pakistani textile industry. Textile exports had a share of 55 percent in the country’s total exports of $17.79 billion during July-March 2010-2011. The share has reduced as it used to be more than 66 percent in the past. This does not, however, reflect negatively on textile exports but, in fact, signifies the increase in exports from other sectors.
The Pakistani economy presented a considerably gloomy outlook when the State Bank Governor Shahid Kardar resigned. The acting SBP Governor Yaseen Anwar took the stage and, while unveiling the Monetary Policy Statement, announced a reduction in the central Bank’s policy rate by 50 basis points (bps) to 13.5 percent with effect from August 1. It is to be hoped that this action, combined with the country’s encouraging export performance and further bolstered by proactive measures being pursued by the government on the energy front, will enable the economy to climb out of the pits and become vigorous again