ISLAMABAD, 18 November 2002 — Foreign trade upswing that has crossed the targeted projections, indicates an economic upturn, however limited it may be.
But, that is good news not only for Pakistan’s foreign trade partners, but also for the domestic businessmen who have experienced a prolonged recessionary situation. Its good news, too, because it has taken place despite the prevailing political uncertainty that was first accentuated by events leading up to Oct. 10 national elections.
According to official statistics just unveiled, exports in the first four months — July to October — of current fiscal 2003, were up 15 percent, compared to the like period of fiscal 2002. Imports, at the same time, rose a very encouraging 13.4 percent.
October, the month of most heightened political tensions because of the elections, were a whooping 20.6 percent up against October 2002. Major increases, over the four months, took place in import of machinery, capital goods, spare parts, industrial raw materials, consumer durables and other consumer products. Imports were helped by a stable rupee. Its has gained more than 8.5 percent against the dollar over the last sixteen months. Interbank market quoted dollar at Rs.58.56/58.57 over the weekend. The kerb rate was still lower at Rs.58.30/58.40. There is considerable optimism that helped buy a favorable exchange rate and a gradually declining bank lending rates, this trend will continue for the foreseeable future. Larger imports, in turn, are helping enlarge exportable surpluses of a wide variety of goods because a major portion of imported industrial raw materials are processed into export goods.
Exports in the first four months of the current fiscal totaled $3.478 billion, up from $3.024 billion in the like period of 2002.
“The government is confident of achieving export target of $10.4 billion in fiscal 2003, as the four-month trade numbers are 5.5 percent ahead of the target,” says an upbeat Commerce Minister Abdul Razzak Dawood. October alone saw record exports of $891 million for this month, up from $760 million in October 2002.
At the same time, July-October imports rose 13.4 percent to $3.79 billion up from $3.34 billion in the similar, 2002 period.
The trade deficit narrowed 2.3 percent to $310.6 million from $317.9 million in the like period of last year. It means that 91.8 percent of imports were financed by Pakistan’s own exports.
A major credit for larger exports goes to the textile sector that contributes more than an average 65 percent to export earnings, totaling $6.0 billion in 2002. It is on two counts: Textile industry is switching to produce more and more value-added products under the Textile Vision-2005 Plan that aims at raising textile exports to $15 billion a year by 2005. All the stakeholders are seriously endeavoring to achieve that target.
Textile industry itself has imported machinery worth $1.0 billion over the last two years to improve value-addition and face the quotaless textile world of post-2004 under the new WTO regime.
Production of “clean cotton” is rapidly on the rise in order to help textile industry, as well as the farmers who are getting higher prices for their produce. At the same time, during years when cotton crop exceeds the domestic needs of around 12 million bales annually, the commodity fetches a better export price.
However, cotton production in fiscal 2003 is projected at around 10.5 million bales. It means nearly 1.5 million bales will have to be imported. A good part of it will be fine quality Pima cotton from the United States for producing high count yarn for downstream fabrics and high value products.
Export of engineering products now at $270 million a year, is also being pushed fast. All the stakeholders are working on “Engineering Vision-2010” to capture something like 10 percent of the annual global market of $6 trillion. Although a late starter compared to India, Pakistan also is pushing for larger export of IT. Sugar and rice exports to a number of countries, and electrical goods to ASEAN, are other areas in which Pakistani businessmen are concentrating.
Exports, overall, are rising, but Islamabad has so for failed to bring Washington around to fulfill its post-9/11 promises of providing larger market access to Pakistani textiles, except for $148 million special additional annual export quota, for three years.
Dawood, for month, has been endeavoring, though unsuccessfully so far, to conclude expanded market access and foreign trade agreement (FTA) with US, but the American administration seems to have buckled-in before the strong US textile lobby, a part of which has already shuttered down.
