Fate of Pakistan’s Exports Hinges On Global Recovery, Reduced Uncertainty: WB Economist

Pakistan’s trade numbers show an overall decline in the first half of the current fiscal year, and its export recovery is dependent on the pace of global economic recovery and reduction in uncertainty, according to World Bank Senior Economist, Gonzalo Verela.

Pakistan’s July-December disaggregated trade data shows a decline in both exports and imports, with exports of goods taking big hits during the period, Varela stated regarding the rising uncertainty of matters concerning the country’s overall trade.

In a series of tweets, the trade and macroeconomic researcher highlighted that overall exports fell in July-December FY23 with services showing marginal improvement. “Pakistan’s exports have declined in H1 FY23 relative to H1 FY22 by 4%. The fall is driven by goods #exports that fell by 5.8%, ” Varela noted.

According to the WB economist, exports expanded to Italy, Spain, Germany, and the Netherlands apart from contractions of shipments to China, the United States, the United Kingdom, and the United Arab Emirates.

Varela went on to say that textile exports, in particular, were still growing, but very timidly. Non-textile exports, particularly vegetables, minerals, and base mineral products, declined, apart from high export growth in foodstuffs, according to the data segmentation.

The data on month-to-month growth shows the export deceleration in vegetable and mineral products, and this is where the estimates show the textile industry’s slowdown during the period.

Varela pointed out the improvement in some of the major services exports of knowledge-intensive services, mainly Telecommunication, Computer and Information Services, and Other business in particular, though at a slower pace than previously observed.

The other side of trade shows that imports have fallen substantially by 19.6 percent in July-December FY23, with almost equal declines in goods and services.

Machinery and textile imports (possibly anticipating a decline in garments exports) and chemicals witnessed negative growth during the period.

The monthly breakdown of data for the most commonly imported materials clarifies some of the decelerations. “Zooming in and checking monthly data shows the steady decline in imports of machinery and intermediate inputs,” Varela added.

A deeper breakdown of the data reveals machinery imports have contracted across different types of machinery.

In his final remarks for Pakistan, Varela concluded in his final remarks for Pakistan that the pace of global economic recovery and the reduction of uncertainty will be critical for the country’s export recovery.