According to the Economic Survey, the composition of Pakistan's exports more or less remained the same during 2016-17 compared to previous years showing high concentration in few items like cotton and cotton manufactures, leather, rice, and few more items. The first three categories of exports account for 71.8 percent of total exports during July-March FY2017 with cotton and cotton manufacture alone contributing 59.6 percent. Traditionally the contribution of these three categories was 71.6 percent during the same period last year, and 68.7 percent during FY 2015.
Pakistan duty free access granted by EU under its GSP+ Scheme, led to an increase in exports to the EU by 38 percent in 2016 over 2013 - from 4.52 billion Euros in 2013 to 6.28 billion Euros in 2016 while exports of textiles to EU increased by 55 percent during the same period. Textile sector has been a major beneficiary of the EU's GSP+ Scheme. Pakistan's exports of leather products, footwear and plastics have also increased considerably as a result of duty free access under GSP+.
The monthly exports for the period July-March FY2017 remained mostly below the corresponding months of last year, averaging $1.681 billion per month as against an average of $1.747 billion last year. The exports are recovering in the third and fourth quarter and negative effects of exports are bottoming out given that some months during July-March FY 2017 like October, January and March showed a growth rate of 2.0 percent, 0.4 percent and 3.2 percent, respectively on year on year basis.
The composition of Pakistan's exports more or less remained same during 2016-17 compared to previous years showing high concentration in few items like cotton and cotton manufactures, leather, rice, and few more items. The first three categories of exports account for 71.8 percent of total exports during July-March FY2017 with cotton and cotton manufacture alone contributing 59.6 percent. Traditionally the contribution of these three categories was 71.6 percent during the same period last year, and 68.7 percent during FY 2015.
Year wise there was no visible change in export destinations and our exports continued to be concentrated in the same markets. Efforts are being made to explore new markets specifically in ASEAN and Asian regions where a lot of potential exists. During current fiscal year, July-March period, Pakistan's imports are showing rising trend at a relatively faster rate (18.7 percent) due to the increased economic activity as part of China Pakistan Economic Corridor (CPEC), particularly in the Energy sector. The construction projects under CPEC require heavy machinery that has to be imported. It has been observed that the economy is currently being led both by investments as well as consumption, resulting in relatively higher levels of imports.
The sharp increase in imports may not be a cause for major worry, the imports during the current fiscal year included around $12 billion of capital goods (machinery, metals etc.), which would eventually increase the country's industrial capacity and help exports flourish.
The increase in import of machinery will have multiplier effect on the economy as the import of crude oil and petroleum products constitute 20.1 percent of total import bill of Pakistan and are second heaviest group in the import after machinery group. Import of petroleum group including Liquefied Natural Gas, Liquefied Petroleum Gas and others surged by 27.5 percent to $7.7489 billion in July-March FY2017; compared to US $6.0788 billion during the corresponding period last year. This increase was driven primarily by higher volumetric imports of furnace oil and high speed diesel (HSD), due to higher demand from power and transportation sectors respectively. Rising imports of power generators also contributed to the increase in demand for HSD.
The machinery group contributed about 23 percent in the total import bill. Import of Machinery group surged by 49.6 percent from, $4.3219 billion in July - March FY2016 to $6.4649 billion in July-March FY2017. Within this group, the import bill of textile machinery registered an increase of 20.8 percent $401.1million) during July-March FY2017 against ($332.1million) the same period last year suggesting increased activity in the textile sector which is a healthy sign and will give fruit in future. Import bill of power generating machinery recorded $2.367 billion during July-March FY2017 as compared to $1.3411 billion over the same period last year, showing an increase of 76.5 percent. Similarly a surge of 25.6 percent ($1.6589 billion) was witnessed in electrical machinery and apparatus during July-March FY017 over $1.3203 billion in the corresponding period last year, construction and mining machinery witnessed an increase of $373.2 million in FY2017 as compared to $223.7 million as compared to same period last year, reflecting an increase of 25.7 percent.
Telecom sector import within machinery group, declined by 1.7 percent ($1.0288 billion) during first nine months of the current fiscal year compared with $1.0468 billion) the corresponding period last year. Mobile phones imports in Pakistan decreased by 8.5 percent during the current financial year 2017 (July-March) as compared to the same period last year. Total imports of mobile phones stood at $524.4 million while these were $573.3 million in the same period last year. Within machinery group, other sub items such as agricultural machinery witnessed a surge of 35.8 percent ($84.4 million) during July-March, FY2017 over ($62.1 million) the same period last year. An increase of 19.4 percent is witnessed in import bill of transport group from $1.9196 billion in July-March, FY2016 to $2.292.1 billion in July-March, FY2017. Import of road motor vehicles increased by 28.7 percent, CKD/SKO increased by 20.9 percent, buses increased by 23.5 percent and motor cars increased by 26.6 percent, during the first nine months of current fiscal year over corresponding period last.
The demand for CKD/SKD kits, parts and accessories all used in locally assembled vehicles increased during this period. Rising imports of auto parts suggests better sales of locally assembled vehicles in the future as the industry imports kits and accessories based on advance booking orders and increased demand for vehicles .Import of all other important items in the transport group also registered an increasing trend except import of aircraft, boats and ships which were down by 30.1 percent during July-March, FY2017 over the same period last year.
In textile group, import of raw cotton witnessed a decrease both in quantity and value by 12.8 percent and 17.5 percent respectively, during July-March FY2017 as compared to same period last year on account of higher local production of cotton. Within agricultural and other chemical group a remarkable decline of 25.2 percent was observed in fertiliser import bill despite an increase of 10.1 percent in quantity imported during July-March FY2017 as compared to corresponding period last year suggesting lower international prices.
Metal group bill also surged by 6.2 percent during July-March, FY2017 over the same period last year. Import of Iron & steel increased by 6.2 percent due to the ongoing construction activity on the back of higher PSDP spending which has increased the demand for imported iron and steel products. Most of the items imported this year included coils and line pipes. The higher demand for coils and line pipes came from the automobile industry as well as from increased investments in the gas distribution infrastructure.
Monthly imports during July-March FY2017 witnessed rising trend. Import averaged $4,292 million per month. On average the monthly import increased by US $690 million per month.
Pakistan imports from China, Saudi Arabia, UAE, and Indonesia constitutes around 50 percent of our total imports. During current fiscal year share of imports from China increased from 27 percent last fiscal year to 28 percent during Jul-March 2016-17. However share of import from Saudi Arabia, has fallen by 2 percent during July-March 2016-17 compared to same period last year due to lower crude oil bill.
Copyright Business Recorder, 2017