Trou­bling trends in ex­ports

The Pak Banker - - 4EDITORIAL - Dr Ka­mal Mon­noo

IN­DUS­TRI­AL­IZED coun­tries guard their ex­ports very jeal­ously. South Korea's ex­ports had been shrink­ing for the past six months mainly on the back of a slug­gish global de­mand and low oil prices, but still the South Korean gov­ern­ment an­nounced some key mea­sures last week to en­sure that its ex­ports once again get on an up­ward tra­jec­tory de­spite these global re­al­i­ties. In Ja­pan we see that the real un­der­ly­ing thrust of Abe­nomics is noth­ing but to res­ur­rect Ja­panese ex­ports by spurring in­dus­trial growth and jobs at home. Shun­ning global out­cry over a con­sis­tently un­der­val­ued Yuan/Ren­minbi, China has in fact fur­ther de­val­ued its cur­rency in re­cent months to see to it that its ex­port do not sig­nif­i­cantly get af­fected amidst a slow­ing Chi­nese econ­omy. And last but not least, ask the Syriza lead­er­ship and they will tell you that Greece's pri­mary prob­lem is that it can no longer pro­duce the ex­portable sur­plus that can take its econ­omy out of its present mess. Closer to home the sit­u­a­tion is even more alarm­ing from the Pak­istani-ex­ports' per­spec­tive, since un­like us our re­gional neigh­bors and com­peti­tors, Bangladesh, In­dia, Sri Lanka and Myan­mar, have all posted a year-on-year growth re­spec­tive na­tional ex­ports.

Pak­istan on the other hand has shown a de­cline in its ex­ports for the sec­ond year now (both PML-N gov­ern­ment years). FY 2015 closed on a dis­mal note for the textile ex­ports of the coun­try which posted a de­cline of mi­nus 4% month-on­month to clock at USD 1.08 bil­lion, tak­ing to­tal ex­ports in FY 2015 to USD 13.47 bil­lion against USD 13.72 bil­lion it clocked in FY 2014, down 1.8% year-onyear. Ma­jor declines were seen in the cot­ton yarn, raw cot­ton and other non-value added cat­e­gories, which posted neg­a­tive growth of be­tween 8% to 11%, on a yearon-year ba­sis. Key rea­sons be­ing cited by


their the gov­ern­ment for this de­cline in our ex­ports are:

1. Col­lapse in cot­ton com­mod­ity prices which re­sulted in lower re­ten­tion rates across the value chain,

2. Dis­con­tin­u­a­tion of Chi­nese yarn pro­cure­ment,

3. Chal­lenges in the gas and power sec­tors, and

4. An on-go­ing fi­nan­cial cri­sis and re­ces­sion in the Euro-Zone.

Ac­cord­ing to the of­fi­cials of the Min­istry of Com­merce, go­ing for­ward, the re­cov­ery in ex­ports will re­main con­tin­gent to: (i) Im­prove­ment in de­mand from Euro­pean Union (EU) (ii) Higher re­ten­tion rates amid re­cov­er­ing cot­ton prices and (iii) An im­proved energy and power sup­ply po­si­tion to the in­dus­try. What it fails to ex­plain is that not only quite a few of these chal­lenges have been preva­lent in Pak­istan since a num­ber of years now, but also that most of them are be­ing faced by our neigh­borly com­peti­tors as well who in­stead have been post­ing in­creases in their ex­ports over the last two years? Clearly some­thing is wrong at our end.

Pak­istan's textile ex­ports went down by 1.78 per­cent dur­ing pre­vi­ous fi­nan­cial year 2014-15. The coun­try had ex­ported textile goods worth $13.48 bil­lion dur­ing the fis­cal year 2014-15 (FY 2015) as com­pared to the $13.72 bil­lion in the pre- ced­ing year re­flect­ing a de­cline of 1.78 per­cent, ac­cord­ing to the latest data re­leased by Pak­istan Bureau of Sta­tis­tics (PBS). In a heart­en­ing de­vel­op­ment, Pak­istan's ex­ports of value-added textile prod­ucts (ac­cord­ing to PBS) rose 7.5% to $4.517 bil­lion in 2014-15 from $4.202 bil­lion a year ago.

Ex­ports of ready­made gar­ments grew 10.5 pc to $ 2.101 bil­lion from $1.909 bil­lion, and of knitwear rose 5.37% to $2.416 bil­lion com­pared to $ 2.293 bil­lion dur­ing the pre­vi­ous year. How­ever, even this may be short-term phe­nom­e­non if the gov­ern­ment fails to proac­tively come up with mea­sures to ce­ment these gains.

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