ISLAMABAD, 13 January 2003 — A significant import surge on the back of larger exports has brightened business prospects for Pakistan’s foreign trading partners.
The latest official statistics indicate, imports rose 18.71 percent during the first half year of fiscal 2003 that ended Dec. 31, 2002. The overall imports totaled $5.79 billion during the period. A large quantity of imports included machinery, industrial raw materials and other non-food, and non-oil products. Their demand rose as the domestic economy is slowly picking up. A large quantity of exportable surpluses is being created as exports are on the rise. A substantial quantity of the imported inputs are processed into these exports.
Actual imports in fiscal 2002 were $10.335 billion while the projection for 2003 is $11.1 billion — plus 7.4 percent compared to the actual imports in 2002. However, if the present trend in imports continues, and exports also go on rising, the year may close on June 30, exceeding the projection. Actual exports in 2002 were $9.1 billion.
Exports during the same six months also rose impressively. At $5.2 billion exports were right on target to close the year with the projected level of $10.4 billion — an all-time high for Pakistan. But business analysts are projecting exports in fiscal 2003 to cross $11.0 billion mark, in case the present trends continue and there are no unforeseen problems. It is rare in Pakistan’s foreign trade history to stay right on target, as for instance exports rose only to $9.1 billion, nearly a billion dollar short of the target, during fiscal 2002.
But, businessmen and the government point out, 2002 exports suffered in the aftermath of 9/11 when a number of United States and European importers had canceled orders.
It had happened when Washington started operations against Afghanistan soon after 9/11. Alleged fears of that war spreading and trade flow disruptions had also resulted in imposition of considerable increase in freight and insurance costs.
But, since then, things have considerably changed for the better for Islamabad. All the basic items and those being particularly pushed are currently increasing according to the projected export targets. Except for September, 2002 all the other five months in the first half of fiscal 2003, recorded a healthy growth, which is again a plus point for the economy and business confidence of entrepreneurs. Good demand and improved unit prices for exported goods have contributed to this growth.
The remaining half of 2003 is projected to see month-wise exports rising from $811 million in January and leading upto $1.08 billion in the final month — June.
However, a greater effort will be required on part of the industry and exporters to move faster items like leather products, surgical appliances, carpets, rice, petroleum products, and sports gear, in the next six months as these have performed below the targets. However, gems and jewelry, chemicals and cement are doing well, according to the government’s Export Promotion Bureau.
Stability of the Pakistani currency that, in fact, is reflected by an 8.5 percent appreciation in the value of the rupee against the US dollar, have helped spur imports.
Growing imports have also widened the trade deficit to $590.335 million in these six months, up from $417.573 in the like year-earlier period. But, officials at the Ministry of Finance and the central bank, State Bank of Pakistan (SBP) are “feeling comfortable” even with the widening trade deficit because the country’s forex reserves are rapidly rising. Larger imports can easily be financed out of growing forex reserves. The SBP says, the liquid forex reserves were $9.335 billion as of Dec. 31, 2002 — up 90 percent from Dec. 31, 2001. “By June 30 this year, the reserves are likely to cross $10 billion,” another all-time landmark, Shaukat Aziz, advisor to the prime minister on finance says. In fact, in view of the improved forex situation and stability of the rupee, Manila-based Asian Development Bank, Moody’s, and Standard and Poors have improved Pakistani credit ratings, over the last few days.