Like other sectors of the economy, exports too are down in the dumps. They have received a big hit from the coronavirus-induced economic decline in the world.
According to the figures released by the State Bank of Pakistan, the exports for FY20 went down by 4 percent year-on-year. They were up by 2 percent up to the month of March. But April proved to be the turning point. In view of the worsening coronavirus situation around the globe, the setback to exports was not unexpected.
The country’s exports plunged by a massive 54 percent in April 2020, compared to the same month last year, and stood at $957 million. The overall exports from Pakistan during July-April 2019-20 declined by 3 percent to $18.4 billion.
Pakistan’s major textile export destinations have been in the grip of the coronavirus over the last five months. As a result, apparel consumption is expected to go down the priority list in the post-corona world. Before textile exports came crashing down, some in the industry expected to capture a greater share of bedwear and towel demand, as hospital demand picked up exponentially. But it did not translate into reality. On the other hand, towel volume was cut to a fourth, while bedwear went down by half.
Basmati exports tumbled by over a quarter in April, according to the latest figures released by the Pakistan Bureau of Statistics (PBS). Fishery exports, which begin to gather momentum around this time of the year, also suffered a setback. The average monthly fishery export volume for April-May for the last two years stood at 26,000 tons, against slower periods later during the year when the monthly volume declines to under 5,000 tons. But there was a sharp decline in the unit price during the outgoing month which affected the exports. At the same time, surgical exports also went down by almost a third on a month-on-month basis.
As for vegetables, exports in value terms dipped by nearly 50 percent against the same period last year. It is worthwhile to note here that on an annual basis, vegetable exports begin to climb down after peaking in Jan-Feb, which means the performance in coming months will bear the brunt of weaker demand. The latter is indicated by the crashing down of unit prices in the last two months. However, meat exports seem to have maintained their momentum, despite industry insiders noting that airway shipments have taken a hit due to the grounding of commercial, cargo air traffic and resultant increase in shipment costs.
It is indeed unfortunate that gains made in food exports during the last 12 months appear to have been wiped out by Covid-19, even though the volume has not gone down in key non-perishable categories such as basmati. The declining trend shows the country will be unable to achieve its $25 billion export target set for the current fiscal year. However, government officials say they are trying hard to recoup part of lost export revenues by product diversification.
Pakistan has opened up the economy sooner than some of its competitors in the region, especially India, which gives it comparative advantage. In the months ahead, the name of the game will be diversification and adjustments in line with the world market trends. The cost is not an issue at the moment, as most things were already in place for the industry in terms of taxes, energy prices, market access and refunds.
A good development is that our textile exporters are said to be preparing to meet the demands of the medical markets such as masks, uniforms (protective suits) and other related textile-made products and sanitizers. Reports are that trade queries from different countries are continuously pouring in about the exports of medical products. These exports would compensate for the substantial amount of losses so far suffered.
As we know, Pakistan mainly relies on the export of textile products which make up more than 50 percent of its total exports. During the last fiscal year, the country was able to export $22.98 billion worth of goods, of which the share of textile goods was $13.33 billion. Efforts should be made now to aim at the diversification of products as well as geographical markets. The Central Asian Republics and Africa should be our major focus now where there is growing demand for tractors, textile and food products. The US and Europe are also potential markets for our textile-made medical products.
The Middle East is one of Pakistan’s major trading partners where reportedly demand of food products has increased substantially after the lockdown. Pakistan’s exports to the Middle East have increased by around 26 percent during the current year. In the Middle East, demand of meat, poultry and rice has substantially increased. This is a good opportunity for our meat industry which it should not miss.