The year 2020 would be remembered mostly for the Covid-19 pandemic which did
not leave any corner of the world unscathed. From the social vantage point, it caused a decisive change in the life patterns of everybody without any exception.
Pakistan, too, was hit by the pandemic, and as a result, life came to a halt; whereas economic activity came to a standstill. Businesses and industries stopped functioning because social distancing was the key to containing the pandemic.
As the world severely got hit by the COVID-19 pandemic, the economies all around the world nearly collapsed, while Pakistan’s economy which was already in its recovery phase sank again.
Read more: “Remarkable turnaround” in economy despite Covid-19: PM Khan
The pandemic induced lockdown throughout the country brought all the economic activities to a halt and the country suffered greatly. But eventually, due to the consistent efforts of the government, the country has been able to get back on track, showing clear signs of recovery.
Once the rising pandemic was controlled, the government started cautiously resuming the economic activity in the country, along with providing relief packages to the businesses to provide support and boost their morale in order to get the economic wheel going again.
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To support exporters in these challenging times and to prevent liquidity problems, SBP offered several measures including a refinancing scheme to support employment and prevent the layoff of workers; increase the limit of refinancing provided to the banks under Exports Finance Scheme (EFS) by Rs. 100 billion; introduced Temporary Economic Refinance Facility (TERF), a concessionary refinance facility aimed at promoting investment both new and expansion; reduced markup rate under Long Term Financing Facility (LTFF) to 5% enhancement of time period for realization of exports proceeds from existing 180 days to 270 days; direct dispatch of shipping documents.
The country has seen a rapid recovery of exports since the removal of coronavirus-related restrictions. The country’s outbound shipments in recent months have actually risen faster than those of regional competitors Bangladesh and India. November shipments have increased to US$ 2.17 billion, the highest during the month in 10 years. The last time Pakistan exported more in one month was in May 2018.
Pakistan’s exports grew for the third consecutive month in November to US$ 2.173 billion, up 8.31 percent from US$ 2.006 billion in the corresponding month of last year. Similarly, exports of textiles also witnessed a surge of 9.31% to US$ 1.286 billion against US$ 1.176 billion in Nov-19.
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Textile exports grew by 4.88 percent year-on-year to US$ 6.04 billion during July November-20 compared to US$ 5.76 billion in the same period last year. The main engine of growth was the value-added textile sector which projected a notable surge in exports. Ready-made garment exports edged up by 4.36% during July to November this year from a year ago. Exports of knitwear increased by 14.34%; bed wear exports were up 12.28%; whereas towel exports went up by 14.24%.
Pakistan’s IT exports increased 39% to US$ 763 million in the first five months (July-Nov) of the current fiscal year. The rise in IT exports is a result of relaxed regulations by the SBP with regard to remitting funds in and out of Pakistan. In addition, the government announced a number of incentives which also included a tax incentive by the FBR.
The government has implemented some reforms such as a reduction in energy prices for the export industries. It is also setting up an export development board under the Strategic Trade Policy Framework. Yet a lot more has to happen and export policies need to be reoriented before the country can get on the path of export-oriented economic growth, which has turned around several Southeast Asian economies and is fast changing our regional peer — Bangladesh.
Global prospects of Pakistan’s textiles
Pakistan’s textile exports have largely recovered from the Covid-19 pandemic shocks and have picked a positive pace. Textile exports have been helped by multiple internal and external factors after tough times. Internally, the energy package announced for the export industry and market-based exchange rates has helped exports become competitive.
Read more: Economy of Pakistan and The Coronavirus
The external factors that have helped the orders from the West to almost double since July, include the US-China tensions, and ongoing supply disruptions induced by the Covid-19 pandemic in India and Bangladesh. These factors have helped Pakistan grab additional export orders from Europe and America. Major international brands are coming to Pakistan because we have cost and tariff advantages over our Chinese competitors in EU and US markets while our Indian and Bangladeshi rivals are struggling because of supply chain disruptions. Pakistan is now an emerging country in textiles.
The new orders are a windfall for Pakistan’s industry. It can sustain for years to come; it all depends on how we steer this industry into the future. We are confident that the growth momentum will remain to continue and country & exports will scale new heights. InshaaAllah.