Pakistan’s exports have plunged for the successive second month to slightly over $2 billion in February, proving once again that a recent peak in exports was the result of some external factors and policy measures, including 30% currency devaluation, did not help.
Contrary to over 4% contraction in exports, the imports increased one-tenth to $4.6 billion last month on an annualised basis, the Pakistan Bureau of Statistics (PBS) reported on Wednesday. Resultantly, Pakistan’s trade deficit widened nearly 24% in February 2021 on a year-on-year basis.
The gap between imports and exports increased to $2.5 billion in February over a year ago, a jump of $486 million or 24%, the PBS said.
It was the second consecutive month that Pakistan’s exports dropped from their previous levels. The $2.04 billion worth of export receipts were the lowest in five months. The exports had started picking up early this fiscal year and peaked to $2.4 billion in December, prompting celebrations on twitter – the micro blogging website – by the government.
But this proved to be a short-term achievement, as the exports again started sliding towards historical band of around $2 billion. Pakistan’s exports have long remained around $2 billion a month and the trend did not significantly change despite 30% currency depreciation during the Pakistan Tehreek-e-Insaf (PTI) government’s tenure in the past two and a half years. During the Pakistan Muslim League-Nawaz (PML-N) tenure, the exports had peaked to $2.3 billion and then again settled below $2 billion.
Every successive government has doled out billions of rupees in subsidies to the exporters every year on account of cheap loans, electricity and gas. The exporters also pay a nominal tax on their incomes. Yet, they have failed and the government does not seem ready to review its flawed strategy of pampering few hundred exporters.
The exporters had attributed increase in exports during previous months to shifting of global trade from China towards South Asian countries and replenishing the dried inventors by the buyers in the US and Europe after the global economy gradually started recovering from the effects of Covid-19.
On a month-on-month basis, the exports decreased over 4.5% to $2.04 billion, according to the PBS. There was a reduction of $97 million in export receipts in February as compared to the preceding month. The imports also registered a decline of 5.2% and stood at $4.6 billion last month. In absolute terms, there was a reduction of $254 million in the import bill last month. As a result, the trade deficit contracted 5.9% or $157 million in February over January.
During the July-February period of this fiscal year, exports increased 4.3% and stood at $16.3 billion as compared to $15.6 billion in the same period of last year, according to the national data collecting agency. In absolute terms, there was an increase of $671 million in exports during the first eight months of current fiscal year.
However, these growth figures are disputed, as the State Bank of Pakistan’s data for the first seven months showed 3.8% contraction in exports. Instead of rectifying things, the Ministry of Commerce has been claiming huge success on the exports front through social media campaign.
Imports during the July-February period increased 7.5% or $2.4 billion to $33.8 billion. As a result, the balance of trade recorded an increase of 10.6% to $17.5 billion, stated the PBS.
The government has already missed the annual export target in its first two years. For the current fiscal year, it has set the export target at $22.7 billion, which will require 6.2% growth. This seems an uphill task now; given the fact that the little growth in exports has been disputed by the central bank. Exports in the first six months were equal to only 72% of the annual target.
Published in The Express Tribune, March 4th, 2021.
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