Troubling trends in exports
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.