News Analysis |
Pakistan exports have shown a boost of 24% in March, apparently due to plunge in the rupee and better export policy initiatives. The merchandise exports witnessed a sharp growth to $2.23 billion in March 2018 from $1.801 billion in March 2017.
According to the official announcement by the ministry of commerce and industry, it has been the highest growth in the export figures since the last 4-years. The sign is encouraging, particularly because, the trend is looking upward considering that it has been the increase of 17%, in comparison to February 2018.
In the current fiscal year, exports showed an absolute figure of $17.08 billion and growth of 13% as compared to the same period in last fiscal year.
The dismissal export figures sent the alarm bell ringing and paved way for critics to bash the government’s decision to keep the exchange rate artificially high as devised by the ex-finance minister Ishaq Dar.
Whereas for imports, Pakistan imported $5.28 billion worth of merchandise as compared to $5 billion imports in March 2017. It accounts for a growth of only 6%, which shows that the growth in exports was greater than the growth in imports.
Moreover, overall import this fiscal year is still high at $44.4 billion as compared to $38.4 billion in 2017. Though the improving export situation is encouraging the year-on-year basis trade deficit has reached $27.3 billion this fiscal year as compared to $23.3 billion in 2017, but it has shown a drop of 5% in March 2018 as compared to March 2017.
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Recently, under the Prime Minister package, Rs 5 billion was released as an incentive for the exporters which accumulated the figure to Rs 21.5 billion, which is still less than the claims of Rs 37 billion submitted to State Bank of Pakistan (SBP). This is a credible evidence to recognize the PM’s efforts to improve the exporter’s confidence through such packages and Ismail Mifta’s stance to allow the rupee depreciate also seems to be a right step to assist exporters.
Though, the improving export situation is encouraging but the year-on-year basis trade deficit has reached $27.3 billion this fiscal year as compared to $23.3 billion in 2017, but it has shown a drop of 5% in March 2018 as compared to March 2017.
Ministry of Commerce acknowledges that “imports are now finding their real value by improved exchange rate regime and regulatory duties on non-essential and luxury goods. However, imports remained under pressure due to the continuation of oil prices on the higher side”. Nevertheless, the government has taken some steps to focus on more on export-oriented sectors, to lift the beleaguered economy out of this quagmire.
European Union (EU) has extended the GSP-Plus status (Generalized System of Preferences) to Pakistan which boosted exports of value-added textile goods by up to 90%. If Pakistan could improve its competitiveness and offers better quality equipped, diversified products, it may improve its stature in the international market.
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Though, the figures demonstrate a healthy sign for Pakistan’s economy derided by the ever-increasing twin-deficit and ballooning public debt. But, Pakistan remains in an acrimonious situation due to stagnant tax revenue which has been historically hovering around 10% of the GDP and the eroding foreign reserves.
The ministry of commerce said that “the initiatives by the government to provide duty drawback as well as the exchange range adjustments have contributed positively to the growth.
The dismissal export figures sent the alarm bell ringing and paved way for critics to bash the government’s decision to keep the exchange rate artificially high as devised by the ex-finance minister Ishaq Dar.
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However, finance minister’s decision to depreciate rupee along with other punitive measures and export-related policy decisions appear to take tender steps in the right direction. Yet, challenges to formulate effective export and industrial policy remain in place amid ever-growing debt which is expected to increase to nearly $100 billion, if rupee is allowed depreciate to 124-25.
If there is no tax policy or incentives, (since, we don’t know how the latest amnesty scheme will perform) and since the government could not think over the development of industry, all we need is to boost the export industry.