Tuesday, October 19, 2021

Pakistan's Quarterly Tech Exports Have Jumped Over 6-Fold Since 2010

Pakistan's quarterly technology exports reached $635 million in the first quarter of the current fiscal year 2021-22, up more than 6 times since the first quarter of fiscal year 2009-10. The nation's overall quarterly merchandise exports have been relatively flat at about $6 billion average during this period. 

Pakistan's Tech Exports 2010-2021. Source: Arif Habib

Monthly technology exports soared 36% YoY to $ 215 million in September, 2021 from $158 million in the same month last year.  During 1QFY22, technology recorded exports of worth $ 635 million (40% of overall services’ exports), up by 43% YoY. 

Recent Tech Exports FY 2021-22. Source: Arif Habib. 

Pakistan also recorded the highest ever monthly exports average of $2.23 billion in fiscal year 2020-21 as textile and garment exports jumped 22.94% to reach $15.4 billion in Fiscal Year 2020-21 (July 2020-June 2021), 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 the first 11months of FY 2021, indicating Pakistan's export diversification with higher value added goods and services. 

Overall Monthly Exports 2007 to 2021

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.  

Pakistan's technology sector is in the midst of an unprecedented boom. It is being fueled by the country's growing human capital and rising investments in technology startups. A recent tweet by Swedish fund manager Mattias Martinsson captured it well when he wrote, "Have followed Pakistan for 15 years. Can't recall any time time when VC activity was anywhere near we've seen in the last few months. Impact of reforms kicking in?".  New laws have made it easier to create startups and offered greater protection to investors.  Digital infrastructure has expanded with over 100 million smartphones and an equal number of broadband subscriptions. 

Soaring LNG prices are now adversely affecting Pakistan's balance of payments and threatening the nation's post-COVID economic recovery.  Pakistan's trade deficit has widened to nearly $12 billion in July-September 2021 quarter, up more than 100% from the same period last year. The nation's heavy reliance on expensive imported energy has been the main cause of prior balance of payments crises that have forced it to seek IMF bailouts more than a dozen times in the last 70 years. 

Related Links:

Haq's Musings

South Asia Investor Review

Soaring Prices of LNG Imports Threaten Pakistan's Economic Recovery

Declining Investment Hurting Pakistan's Economic Growth

Brief History of Pakistan Economy 

Can Pakistan Avoid Recurring IMF Bailouts?

Unprecedented Boom in Pakistan Tech Sector

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

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Riaz Haq's YouTube Channel

PakAlumni Social Network


Z Basha said...

Great to see we have reached 1980 levels again. Those were the days when stalwarts like you at Intel were making their mark!! We should manage the Afghan/Kashmir fallout else history might repeat.

Ahmed said...

Dear Sir Riaz

Thanks for this post.

Don't you think that the IT Industry of Pakistan especially the softwares and IT enabled services in Pakistan which are exported to other countries should reach atleast US$ 10 billion?

According to recent reports, the software and IT enabled services exports of Pakistan I think are still less than US$ 5 billion.


Riaz Haq said...

Overseas Pakistanis sent the highest-ever $8 billion remittances during the first quarter of the current fiscal year, registering a growth of 12.5 per cent over the same period last year.


The State Bank of Pakistan (SBP) on Friday reported that with inflows of $2.7bn in September, workers’ remittances continued their strong momentum and remaining above $2bn since June 2020.

“This is the 7th consecutive month when inflows recorded around $2.7bn on average,” said the SBP. In terms of growth, remittances increased by 17pc in September compared to the same month last year, while comparing with August inflows it was 0.5pc higher.

The surging imports in 1QFY22 widened the trade deficit putting immense pressure on the rupee-dollar exchange rate which ultimately reflected in higher current account deficit. The situation for the economic managers is not comfortable except the higher remittance supported the economy beyond imagination.

The country had received record remittances of $29.4bn in FY21 which helped it curtail the current account deficit.

“The proactive policy measures by the government and SBP to incentivise the use of formal channels, curtailed crossborder travel in the face of Covid19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions have positively contributed towards the sustained improvement in remittance inflows since last year,” the central bank said in statement.

Riaz Haq said...

Overseas Pakistanis sent the highest-ever $8 billion remittances during the first quarter of the current fiscal year, registering a growth of 12.5 per cent over the same period last year.


The highest remittances were received from Saudi Arabia but they were 2.6pc less than the same period of last year. During July-September 2021-22 the remittances from Saudi Arabia were $2.025bn against $2.080bn last year. The contribution of Saudi Arabia in the total remittances during the first quarter of FY22 was almost 25pc. In September, Pakistan received $691m from the kingdom against $694m in the same month of last year.

The remittance from the United Arab Emirates was second highest as it witnessed a growth of 8.7pc while it amounted to $1.545bn during the first quarter of FY22.

The inflows from UK and USA noted a growth of 13.2pc and 32pc amounting to $1.115bn and $836m respectively. The growth in the first quarter of FY21 was 71.5pc for UK and 63pc for USA.

For the first time, the inflows from EU countries surpassed the total inflows from other GCC countries. The inflows from EU countries rose $889m compared to $880.7 from the GCC countries. The remittances from EU countries increased by 47.8pc compared to the same period of last fiscal year.

samir sardana said...

The Tech statistic,is wrongly structured !

Key is USD earned per Pakistani tech worker,in EXPORT sectors.That has to be at par,with India at the MINIMUM

Then the growth in the number of Pakistani tech workers,in EXPORT sectors - which has to be PUSHED UP,AS HIGH POSSIBLE

Then the growth in the annual production,of Pakistani tech graduates

Pakistan has to maximise the last 2,and the per worker rate,will rise with learning curve, ingenuity,creativity,invention and value added services.

Pakistan has to export tech software and services,and ALSO EXPORT PAKISTAN TECH WORKERS. Upgrade from labour exports to GCC,to export of PAKISTAN TECH WORKERS.dindooohindoo

IMK (Imran Khan) has turned around Pakistan and now has to liberate IOK - Inshallah !

Riaz Haq said...

Strengthening Exports is Critical for Pakistan’s Sustained Economic Growth




Pakistan’s economy recovered in Fiscal Year 2021, in part due to the government’s effective use of targeted lockdowns to manage the spread of COVID-19, while also permitting economic activity to largely continue, according to a new World Bank report released today.

The October 2021 Pakistan Development Update: Reviving Exports shows that the country’s real GDP growth rebounded to 3.5 percent in FY2021, after contracting by 0.5 percent in FY2020 with the onset of the global pandemic. In addition, inflation eased, the fiscal deficit improved to 7.3 percent of GDP, and the current account deficit shrunk to 0.6 percent of GDP – the lowest in a decade.

“With effective micro-lockdowns, record-high remittance inflows and a supportive monetary policy, Pakistan’s economic growth rebounded in FY2021,” said Najy Benhassine, World Bank Country Director for Pakistan. “These measures, together with the expansion of the Ehsaas program and support to businesses, were key to strengthening the economy and recovering from the economic fallout associated with COVID-19.”

However, due to strengthened domestic demand, imports have grown much higher than exports in recent months, leading to a large trade deficit. To sustain strong economic growth, Pakistan needs to increase private investment and export more. In examining the country’s persistent trade imbalance, the report identifies key factors that are hindering exports: high effective import tariff rates, limited availability of long-term financing for firms to expand export capacity, inadequate provision of market intelligence services for exporters, and low productivity of Pakistani firms.

“The long-term decline in exports as a share of GDP has implications for the country’s foreign exchange, jobs, and productivity growth. Therefore, confronting core challenges that are necessary for Pakistan to compete in global markets is an imperative for sustainable growth,” said Derek Chen, Senior Economist, World Bank. “Since long-standing issues with the persistent trade gap have resurfaced, this edition of the Pakistan Development Update on “Reviving Exports” provides a timely, in-depth assessment and policy recommendations that can help spur exports.”

The report provides policy recommendations that can help improve Pakistan’s export competitiveness:

Gradually reduce effective rates of protection through a long-term tariff rationalization strategy to encourage exports,
Reallocate export financing away from working capital and into capacity expansion through the Long-Term Financing Facility,
Consolidate market intelligence services by supporting new exporters and evaluating the impact of current interventions to increase their effectiveness,
Design and implement a long-term strategy to upgrade productivity of firms that fosters competition, innovation and maximizes export potential.
The Pakistan Development Update is a companion piece to the South Asia Economic Focus, a twice-a-year World Bank report that examines economic developments and prospects in the region and analyzes policy challenges faced by countries. The Fall 2021 edition titled Shifting Gears: Digitization and Services-Led Development, showed that South Asia’s recovery continues as global demand rebounded and targeted containment measures helped minimize the economic impacts of the recent waves of COVID-19. But the recovery remains fragile and uneven, and most countries remain far from pre-pandemic trend levels.

Riaz Haq said...

#Pakistan #exports register record in October 2021, rise 17.5% to $2.47 billion, highest ever for month of Oct. During the July-Oct 2021 period, Pakistan's exports grew by 25% to $9.468 billion, compared to $7.576 billion during the same period last year.

Pakistan’s exports posted a 17.5 per cent growth in October, rising to $2.471 billion as compared to $2.104 billion in Oct 2020.

"This is the highest-ever export [figure] in any October in our history," a statement issued by the Ministry of Commerce said on Monday.

It added that the export target for Oct 2021 was $2.6 billion.

During the July-Oct 2021 period, Pakistan's exports grew by 25pc to $9.468 billion, compared to $7.576 billion during the same period last year. The ministry's target for July-Oct 2021 was $9.6 billion.

Meanwhile, during the Jul-Oct 2021 period, imports rose by 64pc to $24.99 billion as compared to $15.19 billion during the same period in 2020.

"About 40pc of this increase is investment-driven (capital goods, raw material and intermediates), which indicates [an] expansion of industry and enhanced activity by industry," the ministry said.

The remaining 60pc of the imports were made up of petroleum, coal and gas (34pc); vaccines (11pc); food (8pc); consumer goods (2pc); and all others (5pc). "Most of this is inelastic in nature," the commerce ministry noted in its press release.

In absolute terms, the net increase in imports over the four-month period was $9.801 billion. This comprised consumer goods worth $239 million, food $823 million, capital goods $1.620 billion, raw material and intermediates $2.209 billion, petroleum, coal and gas $3.364 billion, vaccines $1.068 billion, and all others $478 million.

Trade deficit rises 109.4pc YoY
According to commerce ministry data, the trade deficit in Oct 2021 rose 109.4pc over the same month last year. It was $1.803 billion in Oct 2020 and more than doubled to $3.775 billion in Oct 2021.

Similarly, the trade deficit in Jul-Oct 2021 stood at $15.525 billion as compared to $7.617 billion during the same period in 2020 — registering an increase of 103.8pc.

Riaz Haq said...

Record meat exports at 95,991 tonnes in FY21


KARACHI: Pakistan exported 95,991 tonnes (worth $333 million) meat and meat preparations in FY21 — an all-time high figures — against 83,749 tonnes ($304m) a year ago. However, the average per tonne price (APT) remained low at $3,473 as compared to $3,631 in FY20.

The new fiscal started with a twist as the APT price soared to $4,234 in July-August 2021-22 from $3,444 in the same period in the last fiscal year despite drop in quantity to 11,702 tonnes ($49m) from 14,974 tonnes ($51.5m) in the same period FY21, down by 22pc in quantity and 4pc in value.

Exports have been facing a downward trend from July 2021. As per figures of Pakistan Bureau of Statistics (PBS), in July 2021, exports plunged to 5,889 tonnes ($25m) from 8,176 tonnes ($28m) in July 2020. The APT price stood at $4,182 in July 2021 versus $3,465 in July 2020.

In August 2021, exports stood at 6,047 tonnes ($25m) as compared to 6,798 ($23m) in the same month in 2020. The APT went up to $4,213 from $3,418 in the above period.

In the last 10 years, exports hovered in the range of 56,000-85,000 tonnes.

Pakistan’s meat exports have been struggling to compete with the exporters of African countries who have been offering competitive prices for shipments to the Middle East markets than local exporters, Managing Director of PK Livestock Tariq Mehmood Butt said.

However, massive rupee devaluation against the dollar from May 2021 till to date has provided a much breathing space for the exporters, he said. However, high local meat prices have diluted the positive impact of rupee fall against the greenback. One dollar was equal to Rs152 in May 2021 as compared to Rs169 now in the interbank market, Mr Butt added.

He explained that the cattle mandi and quarantine fees were taken by the government, thus pushing up costs and decreasing competitiveness of exportable items.

Pakistan exports 98pc of meat and meat preparations to the ME markets by air. The share of beef is 95pc of total exports; he said adding that Tanzania, Kenya, Ethiopia and Sudan are giving a tough time to Pakistani exporters.

Riaz Haq said...

Pakistan’s Meat Exports Records 100% Growth in A Decade

Pakistan’s exports of meat and meat preparations are gradually penetrating different countries in terms of volume and value as it recorded a staggering increase of over 100 percent over a decade.

Pakistan’s annual meat exports have doubled over the last decade from $152.4 million in FY11 to $304.2 million in FY20. More recently, in H1-FY21, the export of meat and meat preparations has grown by 3.6 percent to $161.5 million from $155.8 million in H1-FY20, according to a quarterly report by the State Bank of Pakistan (SBP).

By the end of 10 months of the current financial year 2022-2021, the exports of meat and meat preparations have surged to $280 million, which is almost nine percent higher than the corresponding period of the last financial year, according to the Pakistan Bureau of Statistics (PBS).

The exports of the meat sector have had gradual growth over a period of decades, with new markets being opened through market players who are working to comply with the food standards of various exporting countries coupled with bringing advanced machinery and new practices to Pakistan.

The meat exports include raw and frozen beef, mutton, lamb, and chicken. The export of by-products includes casing, bones, horns and hooves, gelatin, etc.

The exports of meat and meat products are largely concentrated to Gulf countries including Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain. Export of meat is also increasing to countries such as Hong Kong, Maldives, and Vietnam.

In recent months, Pakistani exporters also received access to lucrative markets like Malaysia and China for the export of beef. The volume of the Malaysian meat market is estimated at $2 billion per annum whereas China’s demand for only beef is huge at $15 billion per year.

The promising rise in the export of meat and meat preparations is an indicator of the pickup in livestock production. The livestock sector represented 60.6 percent of value addition in agriculture and 11.7 percent of the GDP in FY20, and contributed around three percent to the total export earnings; livestock production also engages nearly eight million rural households, making it an important sector in terms of employment outcomes, according to the SBP’s report.

Riaz Haq said...

From Twitter:

Arif Habib Limited

During Oct’21, technology exports was up 29% YoY to $ 195mn. During 4MFY22, technology recorded exports worth $ 830mn contributing 39% to the overall services’ export and marking a 39% YoY jump.





#Pakistan #Economy #AHL