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Sunday, June 2, 2024

Exports shrink for the sixth month in a row

Pakistan's exports shrank by 18.67% for the sixth consecutive month year-on-year to $2.30 billion in February.

The country’s exports for the first eight months ( (July to February) of 2022-23, were down 8.65% at $18.79 billion compared to $20.57 billion last year. The drop shows the government would find it difficult to achieve the export target for the current fiscal year.

Moreover, imports dipped 31.51% to $4.009 billion in February compared to $5.85 billion last year. In the first eight months, the imports fell 23.56% to $40.09 billion this year from $52.45 billion. The trade deficit also decelerated to 33.18% to $ 21.30 billion for the months from July to February. In February alone trade deficit fell by 43.56% to $ 1.70 billion on a year-on-year basis. 

Read more: Pakistan-IMF to reach an agreement next week

The decline in export proceeds is mainly due to internal and external factors raising fears about the closure of industrial units, especially textile, and clothing said the analysts.

Furthermore, the exports started posting negative growth in the first month of the current fiscal year, a slight increase was recorded in August because of the backlog of the preceding month. The export contraction will adversely affect the country’s external account. 

Former chairman of Pakistan Readymade Garments Manufacturers & Exporters Association, Ijaz A. Khokhar said; 

“This is a very tough condition, the government will have to support small and medium enterprises. A further increase in the interest rate will make it almost impossible for SMEs to get access to credit.”

Earlier this week, the government discontinued subsidized electricity to the export sector. This will further add to the cost and will render it uncompetitive on the world markets, especially against its rivals from Bangladesh and Sri Lanka.

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He further elaborated that the buyers are shifting toward Bangladesh, Vietnam, and other countries. Mr. Khokhar was of the view that the government should take effective measures and give a positive message to international buyers.