Pakistani exports registered a whopping increase of over 45.35% in May as compared to April 2020 as the country received more orders from the international market amid the coronavirus pandemic.
During the month of April, Pakistani exports declined by 47.24 on the back of the coronavirus pandemic, which forced businesses to suspend their operations due to the low demand and disruption in supply chains. Global stock markets, businesses, manufacturing, and production had slowed down since the start of the new year owing to the pandemic.
After the ease in lockdown and resumption of economic activities around the world, the exports in May 2020 saw a recovery of 45.35%, with their value increasing from $957 million in the previous month to $1.39 billion, according to the Pakistan Bureau of Statistics.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,
Exports resumption is a leading indicator of easing lockdown globally. What’s helped the most is falling oil prices and controlled imports. Exports need to give maximum support in COVID times.
Furthermore, he expects stability to rein in disorderly movements in currency beyond Rs. 165.
Imports for May dropped to $2.85 billion, down by 11.02% as compared to $3.20 billion in April 2020. Trade deficit during the month of May fell to $1.46 billion as compared to $2.24 billion in April 2020.
As Pakistan’s major share of exports consist of textile, Waqar Hanif who owns a textile indenting/trading business told Propakistani,
We will have to see how different sectors performed, especially textiles as the textile units are facing a reduction in export orders by around 30-50% generally. June will give an exact idea of how things are progressing as most economies are opening up in phases. As imports are declining, the trade deficit figure looks good mainly due to falling oil prices.
Dr. Aadil Nakhoda, an economist and Assistant Professor at IBA, Karachi, said
Fluctuation in exports is expected. An increase in 45% should not be taken as a surprise given that April had a much more stringent lockdown imposed on exporters than May. The lockdown conditions had been relaxed for exporters in May and that is why we see the sharp spike in export figures. On the other hand, the hard-hit European markets may still take time to recover from the adverse impacts. We still do not know when exports will recover to their pre-COVID levels. Here it is crucial for exporters to improve their market intelligence as well as invest in enhancing pre-existing relationships between themselves and their buyers. Exporters that are better established in their partner countries must tap into their export networks to ensure exports increase. Again, several factors such as competitiveness, the ability of supply chains to meet demand as well as conformity assessments will play a major role as exporters try to regain their lost market shares. The role of government facilitation in the sector also becomes ever more important.
Trade Deficit Falls
Over the first eleven months of the fiscal year 2019-20, the country’s trade deficit decreased significantly by 27.77% to $21.05 billion from $29.15 billion.
The decrease in trade deficit can largely be attributed to a fall in imports, which recorded a decline of 18.96%. Imports during the period of July-May (19-20) amounted to $40.85 billion as opposed to $50.41 billion during the same period last year.
Exports, meanwhile, saw a decrease of 6.87% and declined from $21.25 billion to $19.79 billion during the period of July-May (19-20) as COVID-19 wreaked havoc around the globe.
However, a drop of 33.64% was seen in exports for May 2020 as compared to the corresponding month of the last year. Pakistan’s exports declined to $1.39 billion as compared to $2.09 in May 2019 with imports dropping by 43.17% during the same period to $2.85 billion from $5.01 billion in May 2019. However, the trade deficit during May 2020 decreased by 50.02% as compared with May 2019.
The government has now given its approval for the export of locally-manufactured personal protective equipment (PPEs), sanitizers, and other things.
Adviser to Prime Minister of Pakistan for Commerce and Investment Abdul Razak Dawood said that the approval was granted for the export of all PPE of any material (woven or nonwoven) as well as sanitizers.
Razaq also revealed that Pakistan has received a large number of orders for face masks from different parts of the world including the US, Canada, and Europe.
Hundreds of manufacturing units related to garments, sports goods, textile, plastics, and the auto industry are shifting towards manufacturing PPE. These units have added PPE to their product lines. They are providing enough products to cover local demand, and now have the capacity for exports, he said.
Exports of PPE gowns, face masks, and face shields can easily fetch around $1 to $2 billion.