External Sector in Pakistan

Exports managed positive growth amidst hostile international environment and grew by 4.3 percent — rising from $ 11.7 billion last year to $ 12.2 billion in July-February FY09. However, exports fell by 17.7 percent in February 2009 over February 2008 which is really worrying thing for the economy. The exports growth of 4.3 percent may be regarded as good performance in the wake of extremely difficult international and domestic environment. However, we must consider the fact that rice alone has contributed 114.7 percent of the additional amount mobilized from exports and without rice the growth could have been negative 0.7 percent. It implies that positive growth is mainly because of rice alone. This has again raises questions regarding structure of exports and reinforces the need to resort to diversification of exports. Although the international price of rice has fallen from its peak level attained last year, the unit value of rice is still up by 83.4 percent. In quantitative terms the exports of rice has witnessed 8 percent negative growth [Table-7].

Table-7: Structure of Exports ($ Million)
Particulars	July-February		Change	Absolute Increase/ Decrease	% Contribution to Increase in Exports
	2007-08	2008-09	(%)
A. Food Group	1,425.1	2,099.3	47.3	674.3	136.2
B. Textile Group	6,854.0	6,470.4	-5.6	-383.6	-77.5
C. Petroleum Group	730.8	589.2	-19.4	-141.6	-28.6
D. Other Manufacturer	2,232.7	2,444.4	9.5	211.7	42.7
E. All Other Items	417.9	552.4	32.2	134.5	27.2
Total	11,660.5	12,155.7	4.2	495.2	100.0
Non-Textile	4,806.5	5,685.3	18.3	-	-
Share of Textile	58.8	53.2	-	-	-
Share of Non-Textile	41.2	46.8	-	-	-
Source: FBS

The textile industry which has remained the major driver of the export growth once again depicted sluggish performance and it registered negative growth of 5.6 percent. This downward trend in the textile sector is contributed by both significant fall in the unit value of almost all major textile items and supply constraints reflected through negative growth even in quantity terms. The non-textile exports grew by 18.3 percent on the back of strong performers like chemicals and pharmaceutical (14.5%), engineering goods (70.1%), cement (75.7%). These items have very low weight and thus their huge growth could not impact overall quantum of the exports. The export of petroleum products felt the pinch of falling petroleum prices and they declined by 19.4 percent.

The share of textile sector has declined from 58.8 percent last year to 53.2 percent this year and it is persistently posting negative growth for some time. On the other hand non-traditional items are inching up their share by posting healthy growth. We need to further explore areas where we can excel. The product and market wise diversification is the need of the hour. Notwithstanding, good growth in non-traditional sector, we still need to look into the structural problems of the textile industry. The January figure of exports is not representative as the pass through of global melt down is yet to be seen.

Imports registered a negative growth of 1.5 percent in July-February 2009. The imports stood at $ 23.8 billion as against $ 24.1 billion in the comparable period of last year. The growth in imports reflects impact of substantial fall in oil and food imports in monetary terms and these two items were responsible for 80 percent of additional imports bill last year. Import compression measures coupled with massive fall in international oil prices have started paying dividends and imports witnessed marked slowdown during the last two months.