Saturday, January 16, 2021

Overseas Pakistanis Rescuing Pakistan Economy Yet Again

Pakistani diaspora sent home $14.2 billion in remittances in July-December 2020, up 25% from the same period in 2019. Pakistanis settled in the United Kingdom and the United States increased their remittances by 52% and 47% respectively in this period, helping Pakistan achieve a record $1.8 billion current account surplus in the first 6 months of the ongoing fiscal year 2020-21. 

Remittances From Pakistani Diaspora. Source: Arif Habib


While Pakistan's exports increased a modest 5.1%, the remittances from overseas Pakistanis jumped a hefty 25% in response to an appeal by Prime Minister Imran Khan who remains very popular among them. He drew nearly 30,000 Pakistani-Americans to a rally during his Washington D.C. visit in 2019. 

Pakistan Trade 1H of FY 2020-21. Source: Arif Habib


Pakistan's imports increased 5.5%, more than the 5.1% increase in exports, during the first half of the current fiscal year 2020-21. This resulted in $12.4 billion trade deficit, a 5.9% increase. Without the 25% jump in remittances, Pakistan would most likely have a current account deficit rather than a surplus in this period. 

The modest 5.1% increase in Pakistan's exports is still commendable in the midst of the global economic devastation caused by COVID19 pandemic. What is even more commendable is the 19% jump in exports in December 2020 over the same month in 2019, indicating a strong upward trend. 

Emigrants From Pakistan 1990-2019. Source: Pakistan Bureau of Emigration


Pakistani diaspora is the world's 5th largest with more than half a million Pakistanis migrating every year to work overseas. Over 11 million Pakistanis have left home for employment in Europe, America, Middle East and elsewhere since 1971, according to Pakistan Bureau of Emigration. The pace has particularly picked up over the last 10 years.  This phenomenon has helped reduce unemployment in a country where about 2 million young people are entering the job market each year.  It has also helped remittances soar nearly 28X since the year 2000.

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7 comments:

Citizen said...

Welcome news but economies of the sources of remittances have either slowed down or gone into recession causing unemployment. Explanation !

Riaz Haq said...

Citizen: "Welcome news but economies of the sources of remittances have either slowed down or gone into recession causing unemployment. Explanation !"

Two possible reasons why #remittances to Pakistan are defying gravity & WorldBank's gloomy predictions: 1. Number of Pakistanis overseas increasing by over 500,00 each year. 2. More money coming in through formal channels due to FATF pressure.

https://www.riazhaq.com/2019/12/over-half-million-pakistanis-migrating.html

Mayraj F. said...

I think Pakistan should develop places where Pakistanis who are from Boomer generation can settle. The 401 K generation has skimpy savings and cost of living and healthcare will be too expensive for them. They will look to return to Pakistan

These places would be areas that are very walkable with retail and services conveniently located.

Riaz Haq said...

#Pakistan knitted #garment lead as #textile #exports jump 7.7% to $7.4 billion in Jul-Dec (2020-21), up from $6.9 billion in Jul-Dec (2019-20). #Knitwear exports soared 16.5% from $1.5 billion to $1.8 billion in this period amid #COVID19 #pandemic. https://nation.com.pk/18-Jan-2021/knitwear-exports-take-lead-jump-over-7-per-cent

The Pakistan exports of textiles have witnessed an increase of 7.7 per cent in the lead of knitted garments and hosiery during the first half of the current fiscal year of 2021 as compared to the corresponding period of last year.

Pakistan Hosiery Manufacturers Association (PHMA) zonal chairman Faisal Mehboob Sheikh and chief coordinator Adil Butt on Sunday said that the textile exports were recorded at $7.4 billion in Jul-Dec (2020-21) against the exports of $6.9 billion in Jul-Dec (2019-20), showing a growth of 7.7 per cent.
Faisal Mehboob Sheikh said that the textile commodities that contributed in positive trade growth included knitwear, exports of which increased from $1.5 billion last year to $1.8 billion during the current year, showing the growth of 16.5 per cent. He said that it is good news that country’s exports have shown positive growth for the fourth consecutive month in December 2020, which is a vindication of the government’s policy to keep the wheels of economy running during the Covid-19 pandemic. “PHMA extends congratulations to the commerce ministry and the whole nation for achieving record exports in December 2020. “Greetings also to all the hosiery exporters on achieving record exports in December 2020 with a growth of 18 per cent over the previous year, hoping the trend will continue with government full support to promote export culture.”

Faisal Mehboob Sheikh said that Pakistan’s exports of knitwear and other knitted garments and hosiery always play the leading role in exports growth, as the industry continued to show its resilience to the ongoing coronavirus pandemic. Meanwhile, on a year-on-year basis, the textile exports increased 22.7 per cent during December 2020 as compared to the same month of last year. Exports during December 2020 were recorded at $1.4 billion against the exports of $1.1 billion. On a month-on-month basis, the exports from the country witnessed an increase of 9.2 per cent during December 2020 when compared to the exports of $1.2 billion in November 2020.

Based on the figures, the country’s trade deficit also increased by 6.4 per cent during the first half compared to the corresponding period of last year. The trade deficit during the first six months of the current fiscal year was recorded at $12.4 billion against the deficit of $11.6 billion last year, which needs to be controlled through further improvement in exports.

Pakistan Hosiery Manufacturers Association chief coordinator Adil Butt observed that by showing comparatively well performance the value-added textile category has proved that it has been the main driver of growth in the country’s overall exports. He said the value-added sector achieved growth because of preferential access to the 28-nation European Union under the GSP+ scheme which can further be enhanced with the government’s support. He said that Pakistan direly needed to establish an Aggressive Marketing Plan for garment export to get maximum benefits of GSP-Plus status. Adil Butt said that apparel sector can play a leading role in earning foreign exchange and boosting exports. He suggested the government to establish a task force, especially at a time when the Chinese garment industry, which has more than 30 per cent share of the world apparel market, is relocating.

Riaz Haq said...

Pakistan Prosperity Index (PPI) is a monthly review of Pakistan's macro-economy based on the analysis of four periodic data sets- industrial production, trade volume, price levels, and private sector lending. On a 12-month rolling basis, this issue of the report covers the period December 2019 to November 2020, with June 2019 as the base period.
1. Consumer Price Index (CPI)State Bank of PakistanDecember 2019 – November 2020Base month: June 2019 
2. Long-term Financing Facility (LTFF) 
3. Quantum Index of Large-scale Manufacturing (QIM)Pakistan Bureau of Statistics 
4. Trade Volume

Purchasing power has seen acontinuous decline followingthe first peak of COVID-19.o Y-o-Y inflation for Nov 2020hovered at 8.3%.

Despite inflationary pressure and the second wave of COVID-19, over a 12-month period improvements in trade volume andoutput of large-scale manufacturing coupled with a modest increase in private sector lending has resulted in an uptick in economic prosperity.

Following a dip in Aug 2020, PakistanProsperity Index continued to show anupward trend reaching an all-time high of116.3 in Nov 2020.

Improving prosperity index signals not just economic recovery but also provides a reason for optimism.

https://mcusercontent.com/5b3c95d47219ff69ab89a27c3/files/1f0573b5-3f2a-49a9-855f-fc3a00a0ca02/Pakistan_Prosperity_Index_January_2021.pdf

Riaz Haq said...

Why are #Chinese #car makers setting up shop in #Pakistan? Master Chang'an Motors, a Pakistan-Chinese #automotive joint venture recently sold out 6 months’ production of its first compact sedan car Alsvin within five days of market launch. https://www.scmp.com/week-asia/economics/article/3118875/why-are-chinese-car-makers-setting-shop-pakistan?utm_source=Twitter&utm_medium=share_widget&utm_campaign=3118875 via @scmpnews

The sell-out success of the Chang’an Alsvin sedan is the latest Pakistani-Chinese joint venture to have raised eyebrows in the automotive world
Chinese car firms seeking new avenues for growth, while hampered in India, see Pakistan as an entry point to the right-hand-drive markets of South Asia

The stock-clearing sale of 15,000 Chang’an Alsvin passenger vehicles is the latest in a series of headlines about joint ventures between privately held Pakistani conglomerates and Chinese state-owned automotive enterprises.
The Alsvin is assembled at a US$136 million plant near the port city of Karachi owned by Master Chang’an Motors (MCM), established in 2017 as a 70:30 joint venture between the local Master Group and leading Chinese carmaker Chang’an Automobile. In addition to the 30,000 units a year of the Alsvin, it began producing two pick-ups and a multi-purpose vehicle in 2018.
Shanghai-based SAIC Motor, owner of the British car brand MG, this month broke ground at the site of a US$100 million plant near Karachi which is expected to begin production of three small-engined sports utility vehicles, or SUVs, next year.

KA Hanteng Motor, a joint venture with China’s Hanteng Automobile, is building a US$50 million plant in Pakistan and is expected to start making 15,000 SUVs and passenger cars this year.

Al-Hajj FAW, a Karachi-based joint venture formed in 2012, ramped up production of hatchbacks last year to 20,000 vehicles.
When the Master Group proposed the joint venture to Chang’an Automobile in 2016, it did so with the ambition of leveraging the estimated US$60 billion China-Pakistan Economic Corridor (CPEC) to gain access to other Asian markets targeted for investment under the Belt and Road Initiative, MCM’s chief executive Danial Malik said.

Riaz Haq said...

#Pakistan #exports add up to $14.24 billion in 7 months (July 20-January 21), up 5.5% over same period in prior year. On track to exceed $24 billion in current fiscal year in spite of #covid19 #pandemic.

https://twitter.com/haqsmusings/status/1359263728806424576?s=20

--------------------

Exports increase 5.53pc in seven months
The exports of the country during July-January (2020-21) were recorded at $14.242 billion.

https://www.brecorder.com/news/40061421

The exports from the country increased by 5.53 percent during the first seven months of the current fiscal year (2020-21) as compared to the corresponding period of last year, Pakistan Bureau of Statistics (PBS) reported Monday.

The exports of the country during July-January (2020-21) were recorded at $14.242 billion against the exports of $13.496 billion during July-January (2019-20), according to the latest PBS data.

The imports during the period under review also increased by 6.92 percent by growing from $27.316 billion last year to $29.205 billion during the first seven months of current fiscal year.

Based on the figures, the country’s trade deficit increased by 8.27 percent during the first seven months as compared to the corresponding period of last year. The trade deficit during the first seven months of the current fiscal year was recorded at $14.963 billion against the deficit of $13.820 billion last year.

Meanwhile, on year-on-year basis, the exports from the country increased by 8.11 percent during the month of January 2021 as compared to the exports of January 2020. The exports during January 2021 were recorded at $2.132 billion against the exports of $1.972 billion in January 2020, the data revealed.

The imports into the country also increased from $4.121 billion in January 2020 to $4.733 billion in January 2021, showing growth of 14.85 percent.

On month-on-month basis, the exports from the country decreased by 9.89 percent during January 2021 when compared to the exports of $2.366 billion in December 2020.

Likewise the imports into the country also decreased by 5.43 percent in January 2021 when compared to the imports of $5.005 billion in December 2020, the data revealed.

Meanwhile, the country’s services exports during the first half of the current fiscal year increased by 0.31 percent from $2.835 billion last year to $2.844 billion. Likewise, the services imports also declined by 15.68 percent from $4.532 billion during first six months of last fiscal year to $3.821 billion during the corresponding period of current fiscal year..

Based on the figures, the services trade deficit witnessed sharp decline of 42.41 percent by falling from $1.696 billion last year to $0.977 billion during the current year.