Wednesday, July 21, 2021

Pakistan's Textile & Garment Exports Set New Record of $15.4 Billion in FY 2020-21

Pakistan's textile and garment exports jumped 22.94% to reach $15.4 billion in Fiscal Year 2020-21, according to data from Pakistan Bureau of Statistics.  At the same time, the country's technology exports surged 47% to set a new record of $2.12 billion for the last fiscal year that ended in June 2021. Pharmaceutical exports also saw 25.3% growth to $241 million in first 11months of FY 2021, indicating Pakistan's export diversification with higher value added goods and services. 

Pakistan Textile/Apparel Exports. Source: Arif Habib Ltd
Pakistan Textile Exports FY 2006-2021. Source: APTMA

Overall, Pakistan's exports of goods for fiscal 2020-21 rose 13.7% to $25.63 billion. The nation's service exports increased 9.2% to $5.93 billion in fiscal 2021. Combined exports of goods and services added up to $31.56 billion in July 2020 to June 2021 period. 

Pakistan Tech Exports. Source: Arif Habib Ltd. 

Imports grew 23.2%, much faster than exports as the economy recovered from the COVID-induced slump, widening the trade gap in the process. Energy demand drove imports of oil and gas to new highs. 

Pakistan Current Account Balance. Source: Arif Habib Ltd. 

During the last two fiscal years,  Karachi has accounted for 51% of Pakistan’s exports, Lahore came in 2nd with 18%, Faisalabad 3rd with 12% and Sialkot 4th with 8.5%. 

Pakistan's Exports by Cities. Source: FBR

Record inflow of nearly $30 billion in remittances from overseas Pakistanis helped reduce the current account deficit to $1.85 billion in FY 2020-21. It's down 58.4% from $4.45 billion in FY 2019-20. 

Overseas Pakistanis' remittances represent 10% of the country's gross domestic product (GDP). This money helps the nation cope with its perennial current account deficits. It also provides a lifeline for millions of Pakistani families who use the money to pay for food, education, healthcare and housing. This results in an increase in stimulus spending that has a multiplier effect in terms of employment in service industries ranging from retail sales to restaurants and entertainment. 

Over 10 million Pakistanis are currently working/living overseas, according to the Bureau of Emigration. Before the COVID19 pandemic hit in 2020,  more than 600,000 Pakistanis left the country to work overseas in 2019. The average yearly outflow of Pakistani workers to OECD countries (mainly UK and US) and the Middle East has been over half a million in the last decade. 

Pakistan ranks 6th among the top worker remittance recipient countries in the world.  India and China rank first and second, followed by Mexico 3rd, the Philippines 4th, Egypt 5th and Pakistan 6th.  

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan's Debt Crisis

Declining Investment Hurting Pakistan's Economic Growth

Brief History of Pakistan Economy 

Can Pakistan Avoid Recurring IMF Bailouts?

Pakistan is the 3rd Fastest Growing Trillion Dollar Economy

CPEC Financing: Is China Ripping Off Pakistan?

Information Tech Jobs Moving From India to Pakistan

Pakistan is 5th Largest Motorcycle Market

"Failed State" Pakistan Saw 22% Growth in Per Capita Income in Last 5 Years

CPEC Transforming Pakistan

Pakistan's $20 Billion Tourism Industry Boom

Home Appliance Ownership in Pakistani Households

Riaz Haq's YouTube Channel

PakAlumni Social Network


Ahmed said...

Dear Sir

Thank you for posting such great and informative post .

Sir, many Indians come to youtube channels of Pakistan and on Pakistani pages of facebook and brag about their economic growth and especially about the size of their economy. They say that their are 600 billion US$ in the reserves of India and their are only 8 billion US$ in the reserves of Pakistan. Although recently the reserves of Pakistan as far as I know has crossed more than 20 billion US$. Do you think that for a country like Pakistan which has atleast 200 million people(6th or 7th largest population in the world),this much reserve is enough?

Looking forward to your answers.


Ahmed said...

Dear Sir

I have some other question ,is it true that the total size of the economy of a country depends on the foreign exchange reserves? The greater will be the foreign exchange reserves, the greater will be the size of the economy ?

Also Sir, is it true that remittance and foreign investment which comes into a country, is included in "FOREIGN EXCHANGE RESERVES"?

I hope my questions are clear


Riaz Haq said...

Ahmad: " They say that their are 600 billion US$ in the reserves of India and their are only 8 billion US$ in the reserves of Pakistan"

India runs huge trade and current account deficits. So where do these reserves come from? Mainly from India's western benefactors who want to prop it up as counterweight to China.

"Data from IMF’s Balance of Payments statistics for the calendar year (CY) 2020 reveals that India received about $80 billion in foreign direct investment (FDI) and foreign portfolio investment (FPI) inflows, ranking behind China but higher than Russia, Brazil and South Africa put together. As a percentage of GDP, India’s inflows amounted to about 3 per cent, while China and Brazil received 3.2 and 2.2 per cent respectively. On the other hand, Russia and South Africa had capital outflows. It appe .."

Read more at:

Ahmed said...

Dear Sir

This is to inform you that since 1990s, the textile sector of Pakistan was performing very poorly .According to latest reports, the Textile sector of Pakistan was not functioning with its full capacity since 1990s. It is only when PTI government came into power, PM Imran Khan took initiative to revive or restore the textile sector of the country and it was under PTI government that now mashallah textile sector is again functioning in its full capacity and the businessmen of textile sector have given interview to Pakistani journalist and have expressed their happiness over this initiative of PTI government.

So we must appreciate PTI government where they are doing a good work.


Ahmed said...

Dear Sir

Also let me add that PTI government of PM Imran Khan has actually formed a think tank where I think the top economists and researchers are siting and they are conducting research on the economic issues of the country. Their aim and objective is not only to take the economy of Pakistan out of crisis but their aim and objective is also to take the economy of Pakistan to next level.

According to some sources,the exports of Pakistan have increased ,the remittance coming to Pakistan as you have mentioned earlier in your post has increased.

according to some sources, PTI government has reduced its own expenses and is focusing on increasing the foreign exchange reserves.

Riaz Haq said...

Pakistan has been getting quite a lot of good news lately on the economic front. The country posted impressive growth numbers for the last financial year.

The large-scale manufacturing sector grew by more than 14% during July 2020 to May 2021, on the back of astounding growth in automobile, textile, pharmaceutical and chemical sectors. Pakistan received record remittances of $29.4 billion during the last financial year. The country has ‘almost’ completed the FATF action plan, with only one outstanding action. And the vaccination drive and handling of the pandemic have been truly impressive, mitigating the adverse economic impacts. Yet the economic uncertainty is far from over.

Inflation remains high. Trade deficit has bounced back. The circular debt keeps piling up. And debt-to-GDP ratio remains in the red zone. Pakistan’s recent economic recovery therefore remains fragile, especially in the wake of the impending fourth wave of Covid-19.

Going forward, Pakistan’s short-term economic trajectory would depend upon three things: the country’s revenue performance, its current account balance, and the fate of the IMF programme.

On the revenue side, the government has set an ambitious target of Rs5.8 trillion for FBR to finance the expansionary budget to provide a much-needed stimulus to the economy. The realisation of this ambitious target in turn would depend on a host of revenue and enforcement measures. While this target is not impossible to achieve, a more realistic assessment suggests that FBR may fall short of this target by Rs300 to 400 billion. Besides tax revenues, meeting the targets for other revenue sources would also be critical to keep the fiscal deficit in check, such as proceeds from privatisation and petroleum development levy. Any shortfall on the revenue front can take a toll on the promised development spending and may even necessitate introducing a mini budget in the next few months.

Then comes the current account. So far, the healthy remittance inflows have really helped the current account to end up in green, despite the trade deficit touching $30 billion. With growth bouncing back, the imports are likely to swell, further widening the trade deficit. What remains to be seen is if the remittances can maintain their healthy trajectory to compensate for rising trade deficit.

The increase in remittances can be attributed to the pandemic that greatly restricted international travel, a crackdown on hawala/hundi under the FATF action plan and various measures by the government such as incentivising the use of formal banking channels. But considering that remittances from Saudi Arabia, UAE and GCC countries grew only by 9 to 16%, whereas those from UK, US, EU posted 50+% growth, indicates that at least some part of these increased remittances would evaporate once air travel is fully open.

On a monthly basis, the CAD has already touched $632 million and if it continues like this, the rupee can face more pressure leading to devaluation.

The fate of the IMF programme will also play an important role in deciding the near-term prospects of our economic future. Given our external financing needs, Pakistan cannot afford to walk out of the IMF programme. This means that not only will have we to comply with our revenue target but may also have to create additional fiscal space and move the needle on structural reforms. The country would therefore be facing a delicate balance, as too much of tightening could disrupt the efforts to stimulate growth, but too little effort would disrupt the IMF programme.

Besides these economic factors, the rapidly evolving situation in Afghanistan and the looming threat of a fourth wave can also affect some of these calculations. However, once Pakistan successfully navigates its way through these challenges, the medium-term economic future for the country looks bright.

Anonymous said...

So where do these reserves come from? Mainly from India's western benefactors who want to prop it up as counterweight to China.

Ok so how does this work?Someone at the pentagon calls up major wall street firms and orders them to invest 100s of billions in India?

Riaz Haq said...

Anon: "Ok so how does this work?Someone at the pentagon calls up major wall street firms and orders them to invest 100s of billions in India?"

The Pentagon has little to do with US trade and investment policies with foreign nations.

US administrations incentivize trade and investment by a variety of government policies ranging from investment credits to trade preferences and low-interest loans from US-supported international financial institutions like the World Bank and regional development banks like ADB. The private sector takes cues from the government when it makes investment decisions. At the same time, investors, exporters/importers and lenders stay away from nations sanctioned by the United States.


India was the largest borrower from World Bank for 3 of last 4 years
World Bank assistance to India peaked in fiscal year 2010 at $9.3 billion, and help has been provided across sectors like road and power infrastructure, agriculture, health etc.

US body announces $54 mn investment in India to support infra projects
An American financial corporation on Tuesday announced that it will invest USD 54 million in India to support the development of critical infrastructure projects in the country

In 2019, the United States had comprehensive sanctions regimes on Cuba, North Korea, Iran, Sudan, and Syria, as well as more than a dozen other programs targeting individuals and entities pertaining to certain political crises or certain types of suspected criminal behavior, such as narcotics trafficking. OFAC routinely adds (and deletes) entries on its blacklist of more than six thousand individuals, businesses, and groups (collectively known as specially designated nationals, or SDNs.) The assets of those listed are blocked, and U.S. persons, including U.S. businesses and their foreign branches, are forbidden from transacting with them. Under President Trump, OFAC has designated several high-ranking individuals and politically connected firms from Cuba, Myanmar, Nicaragua, and Venezuela. The agency has also recently drawn attention for removing some companies controlled by Russian oligarchs from the SDN list.

Anonymous said...

You do realize India's investment to GDP ratio is something like 30%.Its economy is more than 2 trillion.

It is investing 600+ billion dollars every year most of it its own money in its economy.

The few billion loans is a rounding error in the broader scheme of things.

Riaz Haq said...

Anon: "The few billion loans is a rounding error in the broader scheme of things"

The $600 billion domestic investment in India is in Indian rupees, not US$.

India needs US$ for critical imports like energy, machinery and technology. And India does not earn enough US$ to meet its needs and build reserves. That's where the FDI, FII and external debt fill the gap.

samir sardana said...

It is the COVID bonanza ! The Supply chains in India and Bangladesh,are completely dislocated.

As I said on February 27, 2021 at 9:39 AM,on

"With COVID,if manufacturing requires a 10 foot distance,at the shop floor,then manufacturing from EU/USA will have to shit to Pakistan - as it has the best COVID track record, among all the above nations.Vietnam's numbers cannot be believed"


At the time of MY POST ABOVE,Vietnam had NIL cases of COVID !

I HAD SAID "Vietnam's numbers cannot be believed".TODAY THE COVID NUMBERS ARE 7000 A DAY !



"CPEC is for long term strategic ventures.The SEZs in Vietnam are there to leverage on opportunities arising out of supply chain dislocations and regulatory changes in PRC - which is a short term opportunity"



A nation with a trade and CA deficit,will have a secular currency decline,w.r.t the USD, especially since the US economy is thriving and yields are EXPECTED to rise,and the Fed is expected to HIKE.However,the SBP can make the decline slow and predictable,but also, to ensure that it is "not worthwhile to speculate",on the decline

Speculators are attracted to predictable sharp moves in the PKR.The Shipping Bills and Invoices filed at Port Qasim for Pakistan fuel imports are known to "informed punters" (as they are large FX exposures,of a few importers).Thus,they know the COMMITTED dates of payments and CRYSTALLISED DATE OF PAYMENTS.SBP also prepares the FX ageing outflows,and this is also known to banks,and thus,the "informed punters".

The same applies to the EID inflows

This makes speculation easy,for the punters.If SBP intervenes in the FX market,it is losing its gunpowder,for no reason.

Therefore,the SBP needs to create a framework,to encourage roll overs,and match it to periods of expected large inflows.Else Exporters will route exports via shells,hold export proceeds in USD in the shell,and bring the USD into Pakistan at their option,and then again, hold it in USD accounts,and convert it as the best rates.To offset that,the SBP will offer HIGHER USD rates in Pakistan,which is also a loss to the nation


Roll over of import bills,and a planned depreciation in PKR,to offset the depreciation in the INR and Taka,is the way to manage the PKR.

In the above framework,exporters will book the USD forward,at the time of the export order, and the SBP will have a complete database of expected dates of FX inflows,and that will futher aid the SBP in planning the rollovers.It will also benefit the exporters,as it will freeze his profits,and ensure that the planned profit is as close as possible,to the actual profit.

This will also kill the grey market premium for the USD,and reduce the hawala routing of USD,as the PKR will have a secular decline.The starting point of the grey market premium is that "no one knows what will happen tomorrow".dindooohindoo

Riaz Haq said...

Pakistan's knitwear exports surged in the 2021 fiscal year, increasing 37 per cent compared to the previous 12 months.

The latest figures from the Pakistan Bureau of Statistics show that total knitwear exports were US$3.83, up from $2.8 billion in 2020, the highest growth rate amongst the country's different textile sectors.

Riaz Haq said...

Pakistan’s knitted garment manufacturers have requested their government to allow them representation in meetings related to textile exports, The Express Tribune reports. In a statement this week, Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Chief Coordinator Muhammad Jawed Bilwani highlighted that Pakistan’s knitted garment exports had surged by 36.57% in the 2020-21 fiscal year.

Total exports rose from $21.4 billion in FY20 to $25.3 billion in the previous fiscal year, and the share of textiles in overall exports came in at 60.86%.

“Hosiery products have kept a major share of 15% in the textile group and this segment has the potential to contribute 25% to the total textile exports of the country,” Muhammad Jawed Bilwani, told the newspaper. Bilwani added that the share of knitted garments in total exports would rise to 20% in fiscal year 2021-22.

“Had the government keenly considered proposals of the knitwear sector and addressed all problems and issues of businessmen, the contribution of knitwear garments to the total exports would have been much higher in fiscal year 2020-21,” he said.

The export value of hosiery products rose from $2.8 billion in FY20 to $3.8 billion in FY21.

“Knitwear exports recorded an increase of 36.6% despite the adverse impact of the Covid-19 pandemic,” he said. “The segment also emerged as the highest foreign exchange earner, of $3.81 billion, in the previous fiscal year.”

Mr Bilwani elaborated that the foreign exchange earned by the sector was 25.83% higher than the export revenue earned from exports of readymade or woven garments and 37.68% more than the receipts for bedwear exports.

“If the export of knitted bedsheets and fabric was included, the total foreign exchange earned by the knitwear sector would soar to $4.5 billion, accounting for 29.2% of the entire textile group and 17.91% of the total exports,” he said.

Bilwani asked Prime Minister Imran Khan to focus on the knitwear sector as it had the potential to enhance exports manifold. Bilwani pointed out that major exports of Bangladesh included knitwear products as well and they covered 43.66% of total exports of that country. He also mentioned that the annual global demand for knitwear stood at $208 billion but Pakistan’s share in the global knitwear exports stood at a meagre 1.83%.

He was, The Express Tribune said, of the view that Pakistan had the resources to enhance hosiery exports within a short time frame. He, however, regretted that the government had failed to hold consultations with stakeholders of the knitted garments sector on boosting exports while officials belonging to the rest of the textile chain were invited for meetings.

Riaz Haq said...

#Pakistan #exports $2.3 billion in July — the highest of exports ever achieved in the month. “I want that the export culture to be brought to the country,” says SAPM Razzak Dawood. #economy #PTI #ImranKhan

Foreign companies want Pakistan to manufacture their mobile phones, claims Dawood.
Pakistan made exports worth $2.3 billion in July — the highest of exports ever made in the month.
Federal govt follows the policy of ‘made in Pakistan’, says Shahbaz Gill.
ISLAMABAD: Adviser to the Prime Minister on Commerce and Investment Abdul Razak Dawood has predicted that Pakistan will be exporting mobile phones by the year 2022.

Addressing a press conference alongside the prime minister's aide on political communication Shahbaz Gill in Islamabad on Monday, Dawood said that Pakistan has begun manufacturing mobile phones and some foreign companies have also applied for getting their models manufactured in Pakistan.

“I want that the export culture to be brought to the country,” said Dawood.

He stressed that Pakistan should focus on other industries instead of depending entirely on textile exports in the next five years.

The PM’s aide apprised journalists that the government of Pakistan has developed a strategy for increasing exports.

Briefing the media on the export statistics, he said that Pakistan made exports worth $2.3 billion in July — the highest amount of exports ever made in the month of July.

As per Dawood, Pakistani exports observed the biggest growth in the field of Information Technology, with the annual IT exports exceeding $2b, constituting up to 47% of the growth rate.

He claimed that exports will be amplified up to 38% from the current rate, which is 31.2%.

"We look forward to taking the goods exports up to worth $30.2b and services exports up to $7.5b in the current fiscal year," he added.

On the occasion, Shahbaz Gill said that the federal government follows the policy of ‘made in Pakistan’.

“The government has worked for the promotion of exports since Pakistan’s future relies upon it,” said Gill.

He said that PM Khan was informed about the problems the exports sector faces during a recent meeting with the exporters.

"PM Khan will be meeting exporters on a monthly basis," he added.

Riaz Haq said...

Business Recorder EDITORIAL: It is heartening that the government consulted the exporters extensively before finalising the Export Facilitation Scheme 2021, which will be effective from August 14. The Federal Board of Revenue (FBR) has now allowed exporters to make domestic sales of up to 20 percent of goods manufactured from duty- and tax-free raw materials imported under the Scheme; just as Prime Minister Imran Khan approved a rather ambitious export target of $38.7-40 billion for the ongoing fiscal year. Increasing export revenue is absolutely crucial for Pakistan at the moment and it is appreciated that the government is putting in the necessary legwork, but efficiency also demands that it moves in the right direction.

Since ours is the Import Substitution Industry (ISI) model, basic and intermediate raw materials have to be imported to keep the wheels of the industry turning. That of course means that increasing exports will always jack up the import bill and a bloating current account deficit will keep giving the government headaches. Therefore, there is a need to move away from exporting excess production to producing for exports. And that means going out, identifying new markets and the products that they need, and then producing those products whether they are needed in Pakistan or not in order to tap those markets. That is precisely how other countries such as South Korea and Vietnam with export-led growth strategies succeeded in increasing their trade earnings. And that is what we are going to have to do if we are really serious about materialising a quantum jump in our exports in a hurry.

Adviser to PM on Commerce Razzaq Dawood seemed pretty confident about achieving the big export target as he announced it to the press. Yet even if aiming to go from $25-odd billion to something like $40 billion in one go might seem somewhat unrealistic, and the weakening rupee might not be counted on to stimulate exports as much as the adviser believes, there is still enough to show that the thinking is correct. That’s far truer now than even one fiscal ago considering how the government has gambled on an expansionary budget; that too in complete defiance of the International Monetary Fund’s (IMF’s) contractionary stranglehold that was part and parcel of the $6 billion Extended Fund Facility (EFF).

This is clearly the make-or-break year for the Pakistani economy as well as the Pakistan Tehreek-e-Insaf (PTI) administration. If the economy sags and consumers become more price sensitive then it will have nothing at all to sell at the next election. And the economy will sag if the current account deficit keeps growing. So far, even some of the government’s measures meant to protect people from exogenous price shocks - like not passing the complete burden of rising oil prices in the international market to domestic consumers – are impacting the C/A deficit in the wrong way. Last year record remittances stepped in and kept the C/A in green for most of the fiscal, but they’re not likely to stay strong enough to allow many more celebratory tweets on the part of the ruling party.

Razzaq Dawood is not new to this game. He was commerce minister in the Musharraf administration as well, when the then prime minister Shaukat Aziz initiated a global outreach scheme to hunt down new export markets and produce to cater to their demands. But then that administration, along with all such plans, suddenly unraveled and the new government’s new finance team, interestingly enough headed by the current finance minister, seemed to have more traditional ideas. Now Razzaq Dawood has the chance to put a similar plan into action with even more force since the entire government’s long-term survival, just like the country’s, hinges on how much we can earn from exports and how soon the gap between imports and exports can be overcome.

Riaz Haq said...

As of June 30, 2021, top 10 countries with highest exposures accounted for 66% of International Development Association’s total #debt. IDA’s largest exposure to a single borrowing country, #India, was $22 billion. #Pakistan ranks 3rd with $16.4 billion

Portfolio concentration risk, which arises when a small group of borrowing countries account for a large share of loans
outstanding, is a key consideration for IDA. Concentration risk is managed through the SBL, which caps exposure to
any single borrowing country at 25 percent of equity, in line with the Basel-based maximum exposure limit.
For FY22, the SBL has been set at $45 billion (25 percent of $180.9 billion of equity as of June 30, 2021), marginally
higher than FY21. Currently, the maximum country exposure levels compatible with IDA’s overall capital adequacy
target are lower than the SBL for all IDA-borrowing countries. As a consequence, the SBL is not currently a
constraining factor.
As of June 30, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure (Figure
12). IDA’s largest exposure to a single borrowing country, India, was $22 billion as of June 30, 2021. Monitoring
these exposures relative to the SBL, requires consideration of the repayment profiles of existing loans, as well as
disbursement profiles and projected new loans and guarantees.

Riaz Haq said...

All short-term indicators show Pakistan's economy firmly in growth stage: SBP chief

State Bank of Pakistan Governor Dr Reza Baqir said on Friday that all short-term indicators showed that the stabilisation phase had ended and Pakistan's economy was now "firmly in the growth stage".

Addressing a press conference in Islamabad, he said he wanted to talk about the current account deficit (CAD) in a "broader context", adding that it should be talked about with happiness because it was a "sign that our economy is growing".

He recalled that two years ago, discussions were focused on economic recession and the low GDP growth. "Three months ago, you were saying GDP growth would be two per cent in the last [fiscal] year. [But] the estimate was 4pc. The estimate this year is of 4-5pc growth."

Pakistan's economy had fully completed the phase of stabilisation in the last 2.5 years, he said. "The country showed the international community that it controlled two reasons for problems — current account deficit and fiscal deficit," he added.

"After stabilisation, [Pakistan's economy] shifted towards growth and the proof is in front of you in the form of 4pc growth. All short-term indicators — auto sales, cement sales, electricity consumption and fast-moving consumer goods — are showing that we are firmly in the stage of growth."

The SBP governor said it should be appreciated that there was no talk about an economic recession now, instead the conversations revolved around the improving economy.

He said that Pakistan's net international reserves — the figure for which was very important because short-term debts were subtracted from it — would rise because of the new special drawing rights (SDR) allocation by the International Monetary Fund (IMF).

"Our reserves should come to historical highs," he predicted.

'No alarm bells regarding CAD'
Baqir noted that the current account deficit (CAD) figures for May and June were high which had led a lot of journalists and analysts to question whether it was increasing very rapidly.

Read: Current account deficit accelerates to $632m in May

Giving the State Bank's views on the matter, he recalled that the central bank had said in its monetary policy issued last month that the current account deficit would be between two and three per cent of the GDP in this fiscal year.

"This roughly translates to a current account deficit of $6.5-9.5 billion for this year. First, it is a sustainable level of current account deficit according to our assessment," he said explaining that a "moderate level" of CAD was "good news" for emerging markets.

He said international experience showed there were three alarm bells that "caused worry", adding that not even one of those alarm bells were ringing in Pakistan's case.

"We faced difficulty in the past when our current account deficit reached 6pc of GDP and after that, our reserves losses were [so great] that we had to go to the IMF."

The first alarm bell was when the current account deficit was increasing very fast, he said while the second alarm bell was if the exchange rate was not adjusting to the current account deficit.

"It is a natural phenomenon that if your outflows are more, imports are rising and exports are not increasing, then the exchange rate should adjust. If the exchange rate in a market-based country is showing a good two-way adjustment as in the case with Pakistan, then it is a positive indicator."

The third alarm bell was a massive decrease in reserves, he said. The opposite was happening in Pakistan, however, the SBP governor added.

"Our conditions today are on the opposite end of these three points. Our reserves are at $18bn [and] our exchange rate is adjusting in an orderly way."

Riaz Haq said...

Pakistan Prosperity Index up 13pc as businesses pick up

After falling in April and May 2021, Pakistan Prosperity Index (PPI) hit an all-time high of 135.9 in June, driven by post-lockdown turnaround in commercial activities, a study showed on Thursday.

According to a latest report released by Policy Research Institute of Market Economy (PRIME), PPI increased 12.8 percent on account of a marked improvement in the business activities around the country.

PPI is an agglomeration of trade volume, lending to the private sector, purchasing power and manufacturing output indices.

The trade volume increased Rs548 billion year-on-year (YoY) and Rs360 billion month-on-month (MoM) with the resumption of business activities and reopening of international markets.

Private sector borrowing from banks has been on an upward trajectory owing to subsidised borrowing rate, while, long-term financing facility stood at an all-time high of Rs390.8 billion in June 2021.

In the context of purchasing power, the YoY inflation was reported at 9.7 percent, while the MoM one clocked in at a negative 0.3 percent, a manifestation of improvement in purchasing power. The prevalent high levels of inflation are mostly because of hike in food and energy prices.

Large Scale Manufacturing (LSM) increased by 4.36 percent MoM. This increase can be attributed to the higher demand emanating from ease in lockdown, mass vaccination and opening up of business.

In addition, higher production cost fueled by higher energy prices, and supply side disruptions of raw material all had a fair share in restricting LSM’s output. Notwithstanding, the overall economic outlook, as measured by PPI, seems to be encouraging.

The performance of economy indicated by PPI is consistent with the latest Business Confidence Survey 2021 by Overseas Investors Chamber of Commerce and Industry (OICCI), which also illustrated the strengthening of business confidence and augmented growth prospects owing to an uptick in the business activities.

With the ease in lockdown restrictions and a mass vaccination drive, overall state of the economy appeared encouraging and on a right track, the PRIME report said.

It said, however, there was still a need to curb the inflationary pressure, as this would not only improve the purchasing power/real incomes but also reduce the input cost of LSM.

The study stressed that addressing the supply side shocks of basic food items was pertinent to lower food inflation, which was the main cause of rising overall inflation in the economy.

These supply side shocks called for more liberal trade measures and elimination of state intervention in the market, the report added.

Riaz Haq said...

#Pakistan steps up #oil and #gas imports as #economy recovers. So far this year, the nation has imported at least 785,000 tons of fuel oil through tenders, up 52% from what it imported all of last year. #LNG imports are up 23% to about 5.3 million tonnes

Pakistan has stepped up its oil NSE -1.37 % and gas imports this year from last year as demand from its power sector increases amid more economic activities as coronavirus-induced restrictions are lifted, industry sources said.

The country is a key importer of liquefied natural gas (LNG) and fuel oil used for power generation. Any significant increase in imports typically push up prices for these fuels.

So far in 2021 through September, the South Asian country has imported at least 785,000 tonnes of fuel oil through tenders, up 52% from what it imported all of last year, according to data from tender documents and traders.

Its overall LNG imports rose by 23% to about 5.3 million tonnes though August this year, compared with the same period last year, Refinitiv Eikon shiptracking data showed.

"Many plants are revving up production as the economic activities are going back to normal, which has been the main driver in the power sector," a Pakistan-based source told Reuters, declining to be named as he was not authorised to speak with media.

"Oil-fired power plants can be started in a short time and are used usually in summer when power generation on LNG is still not enough," the source said, adding that demand for fuel oil could wane from October when power generation demand eases as the weather gets colder.

The country has also added about 250,000 tonnes of storage for oil products this year, mainly for gasoline and gasoil, and revamped some existing tanks, which has also added to fuel demand, the first source said.

"But, high steel prices are putting pressure on construction projects, which could in turn pressure demand for oil," the source added.

Riaz Haq said...

#EU-#Pakistan Business Forum on Sept 8: EU is Pakistan’s 2nd most important trading partner, accounting for 14.3% of the country’s total trade in 2020, and 28% of total #exports. Over 78% of Pakistan’s exports enter the EU at preferential rates (GSP+).

The first European Union (EU)-Pakistan Business Forum for small and medium enterprises will be launched on September 8 to offer opportunities for bilateral trade enhancement. To be launched by the delegation of EU to Pakistan, the forum will provide opportunities to enhance the use of generalised scheme of preferences plus (GSP+), bring in new EU investment, encourage European companies to import and promote international sustainability standards.

The forum will also focus on assessing the impact of COVID-19 on trade under GSP and engaging businesses to benefit from the facility.

The EU is Pakistan’s second most important trading partner, accounting for 14.3 per cent of the country’s total trade in 2020, and absorbing 28 per cent of Pakistan’s total exports.

Pakistan’s exports to the EU are dominated by textiles and clothing, accounting for 75.2 per cent of the total exports to the bloc in 2020.

As a result of GSP+, more than 78 per cent of Pakistan’s exports enter the EU at preferential rates. Around 80 per cent of the textiles and clothing articles imported to the EU from Pakistan enter the region at a preferential tariff rate. Around a quarter of these imports are bed linen, table linen and toilet and kitchen linen.

Riaz Haq said...

ADB to loan USD 6 billion in three years to #Pakistan. Finance Minister Shaukat Tareen said that the Economic Advisory Council had prepared recommendations to bring structural reforms in 14 sectors of the national #economy. #development

Amid the testing time for Pakistan's economy, the Asian Development Bank (ADB) is set to provide USD 6 billion over a three-year period to the country, local media said. This announcement was made by the country director of the ADB, Yong Ye, who called on Pakistan Finance Minister Shaukat Tarin on Friday, Samaa TV reported.

Finance Minister Shaukat Tarin said the Pakistani government was committed to pursuing inclusive, efficient, and sustainable economic growth. According to the Samaa, Tarin told the ADB director that country's reform in the power sector and efforts to boost revenue collection had started yielding positive results.

The finance minister said that the Economic Advisory Council had prepared recommendations to bring structural reforms in 14 sectors of the national economy. He added that short, medium and long-term plans had been formulated to achieve this objective. Last month, Pakistan Muslim League-Nawaz (PML-N) President and Leader of Opposition Shehbaz Sharif had slammed the Pakistan Tehreek-e-Insaf (PTI) government saying that the ruling party has drowned the country's economy under debts.

He also lashed out at the Imran Khan government over the "unprecedented level" of inflation in the country and added that during its three-year tenure, it did not build a "single penny" project, The Express Tribune reported. "Five million people have been rendered unemployed by the incumbent government, it has become impossible for the poor to afford two square meals a day," Shehbaz Sharif had said while addressing a National Assembly session in Islamabad. (ANI)

Riaz Haq said...

Pakistan is on track to achieve a record $32 billion in remittance inflows in the current fiscal 2021-22 as its over nine million overseas workers remitted a record $8.04 billion during the first quarter ended on September 30.

Foreign exchange inflows may hit $70 billion in 2021-22 on rising exports and surging RDA

Textile Exports figures for September 2021 show a business of $1.503 billion, 26% increased growth over the corresponding year with 28% Textile export growth in Q1 FY22 (from $3.5 billion to $4.5 billion)

Riaz Haq said...

Auto Sales up by 84% YoY in 1QFY22; Highest Ever Sales during 1Q

Sep’21: 22,235 units +59% YoY; +2% MoM
1QFY22: 68,889 units, +84% YoY

Auto Sales
Sep’21: Automobile Sales Depicting Growth of 59% YoY
Auto sales data for Sep’21, portrays an increase of 59% YoY and 2% MoM to 22,235 units. Despite shortage
of semi-conductors at the international markets and suspension of bookings of various automobiles, the
massive growth in sales volumes can be attributable to i) higher demand of automobiles given government
support in lieu of relief measures and reduced FED on vehicles across the board together with sales tax
reduction for below 1000cc cars which resulted in reduction in car prices and higher sales volumes, ii) rapid
pace of economic growth which improved purchasing power parity, iii) low policy rate aiding car financing, and
iv) healthy farmers yields because of higher prices of agricultural products.
In 1,000cc category, volumes are significantly up by 143% YoY owing to massive surge in sales of Suzuki
Cultus. In LCVs 4x4 category, total sales stood at 4,158 units, increasing by 51% YoY due to bounce back in
dispatches of Fortuner, Ravi and Tucson by 397%, 65% and 51% YoY, respectively.

Riaz Haq said...

‘Trade Diversification Policy’ boost country’s exports in non- traditional markets: Razak Dawoo

The Ministry of Commerce has launched the ‘Look Africa campaign’ in search of new unconventional markets and did a lot of work on Central Asian markets, which has resulted in good exports. He said that in addition, new industrial units are being set up to promote product diversification to boost domestic exports in information technology, light engineering including tractors, fisheries and electronics and mobiles.

So far, Country’s exports of non-traditional products, including information technology, have grown by 60 percent in the last four months. Razak Dawood said that the increase in the existing exports was a manifestation of good policy of the present government during Covid -19. He said that like Association of South East Asian Nations (ASEAN), “We also need to strengthen the our regional bloc in South Asian Association fo.r Regional Cooperation (SAARC) and increase bilateral trade activities in the regional countries.”

He said that the government has reduced tariffs and duties on raw materials to zero per cent to increase the country’s exports. These include Textile, Fiber and Jute where tariffs are discounted.

Replying to a question, he said that Pakistan exports to Central Asian Republics (CARs) countries increased to USD $ 145 million in 2020-21 from USD $ 104 million in 2019-20. For six months, from July-December 2021, these exports increased by 173 percent to USD$ 134 million from USD 49 million during the same period last year, he said. The Ministry of Commerce’s ‘Silk Route Reconnect’ initiative is now bearing results, he added.

To increase the trilateral trade Volume with CARs, the Adviser said that the Pakistan-Uzbekistan Transit Trade Agreement was signed in 2021 at Tashkent and both the countries discussed opening banks in each other’s country. “We are negotiating Preferential Trade Agreements (PTAs) with Afghanistan, Azerbaijan and Uzbekistan”, adding, transit trade agreements were also being negotiated.

The advisor said that for truck movement, their negotiations were at an advanced stage. Replying to another question on Information Technology exports, he said that there is a lot of scope to increase exports in Information Technology (IT) from non-traditional sectors at present.

The current annual $ 2.5 billion IT exports are very low, “We now have an annual export target of $ 4 billion this year, he said.

Razak Dawood said that there was a need to promote export culture in the country at present and the government wanted to increase exports on priority basis.

He added that Micro Small and Medium Enterprises (MSMEs), that use e-Commerce platforms, are around five times more likely to export than those in the traditional economy and the policy aims to pave the way for holistic growth of e-Commerce in the country by creating an enabling environment in which enterprises have equal opportunity to grow steadily. He stressed that the way forward for Pakistan on the economic front is to focus on exports, specifically IT related exports.

While informing about the current export situation, he said that because of prudent economic and trade policy of the government, Pakistan export target of USD $15.125 was achieved in the first half of FY 2021-22 from July-December.

From July-December 2021, Pakistan exports were USD$ 15.125 billion and the target for the first half of the current FY, were USD$ 15 billion, said. Razak Dawood said that Pakistan’s exports during December 2021 increased by 16.7 percent to USD$ 2.761 billion as compared to USD$ 2.366 billion in December 2020, showing an increase of almost USD $400 million.

Riaz Haq said...

Faseeh Mangi
Pakistan’s 🇵🇰 D.G. Khan to Export Cement to U.S. for the First Time

The cement maker is in process to ship 50,000 tons of the building material to the US 🚢


In a first: Pakistan's D.G. Khan to export cement to US: report
Ship is being loaded at Karachi port for delivery to Houston, says CFO

D.G. Khan Cement Company is in process to ship 50,000 tons of cement to the US, reported Bloomberg on Tuesday, a welcome development for Pakistan that is desperately seeking an increase in exports in the face of a widening trade deficit that has pushed the rupee to record lows.

Company CFO Inayat Ullah Niazi stated that a ship was currently loading cement at a port in Karachi for delivery to Houston, added the report.

The development comes at a time when the country's exports registered negative growth of 10.22% on a monthly basis in May 2022, clocking in at $2.6 billion from $2.897 billion in April 2022, according to latest figures released by the Pakistan Bureau of Statistics (PBS).

D.G. Khan Cement, one of Pakistan's largest cement makers, posted a 26% higher profit during the nine-month period that ended March 31, 2022 with earnings amounting to Rs4.1 billion. The company had posted earnings of Rs3.25 billion in the same period of 2020-21.

In 2020, DG Khan Cement won orders for export of cement to the Philippines.

Meanwhile, in a report published earlier, JS Global analyst Muhammad Waqas Ghani stated that continuously rising coal prices and rupee depreciation have led to the procurement of coal at higher rates by cement manufacturers, requiring them to raise domestic prices by Rs40 per bag during the last few weeks.

With an almost 50% (Rs300 per bag) increase in the last 12 months, further price increments would be needed to neutralise the coal cost impact, if prices remain elevated, added Ghani.

"If coal prices stay at these high levels, 4QFY22 profitability will likely be impacted given higher average cost of coal inventory."