ISLAMABAD , 22 April— Both exports and imports are looking up, indicating new openings for Islamabad’s trading partners of a larger foreign trade turnover in the next few months when they can hope to do more business and expand their exports to Pakistan.
The latest official data is optimistic. It indicates, the gloom cast over business in the wake of Sept. 11 is beginning to thin out, if not totally lifting. It is quite a far cry from the days immediately following Sept. 11. The overall exports for the current fiscal 2002 are still $9.1 billion.
The trade deficit, a constant headache for government’s economic mangers and the business, has narrowed down rather dramatically, to a historic $0.82 billion, without being rhetorical, in the first nine months of fiscal 2002 — July, 2001 to March 2002. It was $1.31 billion in the like nine months of fiscal 2001. Export earnings financed 89 percent of the import bill. The picture of the overall balance of payments, always under sever strain, has also improved. This is the result of a reduced trade gap, larger aid inflows, rescheduling of long-term official foreign debt, and doubling to $1.4 billion of home remittances sent by expatriate Pakistanis working in the Gulf, Saudi Arabia and the Middle East.
Exports in the same nine months rose to $6.53 billion while imports moved up to $7.53 billion. The latest turn-around in foreign trade follows an overall decline of 2.67 percent in exports, and 8.44 percent in imports, in the first nine moths of current fiscal, in comparison to the like period of last year. Business and the government place their hopes of recovery and expansion in foreign trade on the foreign trade statistics for March which saw exports rise 11 percent to $725 million compared to February. The trend is likely to continue.
At the same time, imports rose 18 percent to $886.61 over February. It confirms, recovery, though still very fragile, is starting up. While export volume is important because of the dollars it brings in, the level of imports going up is more significant to my mind. This is because nearly two-thirds of imports comprise industrial raw materials and the much-needed machinery that Pakistani business sorely needs for upgrading and expansion. It is particularly true of the textile sector that alone contributes more than 60 percent to total exports.
Increased imports of machinery and industrial raw materials for the textiles is also important because there is a growing demand for value-added products of this sector. More Western markets seem to be opening up for these items, as United States, but more importantly the European Union, have allowed larger imports from Pakistan beyond the traditional quota limits. Several of these items now enter EU duty-free. What happened to exports to the two major importers of Pakistani goods in the wake of Sept. 11 and the war against Afghanistan? Officials in Islamabad say the overall exports to US were down slightly in the first half of fiscal 2002. The exports are projected to be slightly lower than last year, when the current fiscal ends June 30.
EU increased Pakistan’s export quota by 15 percent and allowed duty-free imports textiles into EU following Sept. 11 attacks. The arrangement is for three years, effective Jan. 1 this year. During this period Pakistani business ought to step up their export operations and establish themselves well in EU, before the WTO regimes fully set in. In the past, 25 percent of all Pakistani exports that use to go to EU in early 1990s, had come down to 22 percent before it raised the quota by 15 percent and allowed duty-free imports from Pakistan.
Nearer home, trade between India and Pakistan was expanding in the first half of the current fiscal, but then came the military confrontation between the two of them in March. It lead to suspension of trade, as well as all transport and communications links. The suspension stays, so far. Pakistani exports to India had risen to Rs.1.802 billion in the first half of fiscal 2002, up 2.15 percent from Rs.1.678 billion in the like period of 2001. Similarly, Indian exports to Pakistan were up 17.87 percent to Rs.6.383 billion, from Rs.5.415 billion during the same period.