ISLAMABAD, 19 July 2004 — A major upsurge is taking place in Pakistan’s import and export sector, which in turn is feeding the expanding Asian economy.
Pakistan’s total imports for the recently ended fiscal 2004 were a record $15.47 billion, up 27 percent from $12.22 billion in 2003. Exports totaled $12.27 billion, an increase of 10 percent from $11.16 billion last year, leaving a trade deficit of $3.20 billion. This is compared to $1.0 billion in 2003. Analysts believe it may widen further in 2005 with continued large imports of industrial machinery, raw materials, and wheat, along with the current high oil prices and other factors.
Opportunities for exporters to Pakistan come on the back of growing demand and foreign exchange inflows. The official forex reserves are close to $13 billion and cover almost the entire year’s imports. As exports rise, business and bankers see no problem in Pakistan being able to meet its growing import bill. Imports include a variety of industrial machinery and equipment, synthetic yarns and fibers, fertilizers, insecticides, industrial raw materials, iron and steel, aluminum, and chemicals.
The projection of growing imports is confirmed by the actual volume and import value in 2004. Imports of industrial and plant machinery rose 39 percent compared to 2003 while import volumes of synthetic yarn and fiber grew 15 percent during the same period. Fertilizers, chemicals and insecticides were up 26 percent, and iron, steel and aluminum rose 31 percent. The 10 percent increase of exports was mainly on the back of a 12 percent increased in textiles. Exports of fabrics rose 27 percent to $1.71 billion while cotton yarn and knitwear both surpassed $1.4 billion.
Engineering products like transport equipment, auto parts, electric fans and a variety of machinery grew by 30 percent. Rice exports, included high quality ‘basmati’ rice, rose 13 percent to $628 million, overshooting its $600 million target.
The volume of trade with Afghanistan increased to $700 million in 2004, from $20 million in 2002. Finance Minister Shaukat Aziz estimated the volume will rise to $1.0 billion in 2005, mainly because of the increased pace of reconstruction and development.
Imports next year are projected to grow further from September, as a result of the recent decision by the European Union to allow duty concessions on certain varieties of rice imported from Pakistan. The EU agreed to review its March 2004 decision to levy a 13.1 percent anti-dumping duty on bed linen category 20 and to reinvestigate complaints made by some Europeans of alleged Pakistani dumping.
Pakistan’s present annual bed linen exports to EU range between $350 million-$400 million.
Businessmen, at the same time, say that an enlarged EU is buying more from Pakistan than before. Exports are boosted by a stronger euro against the rupee.
A significant surge in Pakistan’s exports is also expected as a result of several preferential and free trade agreements recently signed. The full implementation of the South Asia Free Trade Agreement (Safta) in January 2006 will encourage more growth in the economy.