Regional exports fall as sales to China shrink by a quarter

ISLAMABAD: Pakistan’s exports to nine neighbouring countries recorded a significant decline of 19.68 per cent during the first 11 months of the outgoing FY23, according to data gathered by the State Bank of Pakistan (SBP).

This drop is largely attributed to a decrease in shipments to China. Notably, the decline in trade is not limited to exports alone, as imports, particularly from China, have also witnessed a sharp decrease in the 11MFY23.

In line with the government’s cost-cutting measures, the clearance of import containers had been delayed in FY23, and the SBP has given low priority to opening letters of credit for consumer goods.

The country’s exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives dipped to $3.353 billion — just 13.21pc of Pakistan’s total exports of $25.38bn in July-May FY23.

China has emerged as the top destination for Pakistan’s regional exports, surpassing populous countries like India and Bangladesh. However, in the first 11 months of the outgoing fiscal year, Pakistan’s exports to China experienced negative growth compared to the same period last year.

China accounts for the majority share of regional exports, standing at 56.39pc, while the remaining share is distributed among eight other countries.

During the July-May period of the current fiscal year, Pakistan’s exports to China declined by 25.66pc, reaching $1.891bn, compared to $2.544bn in the corresponding period of the previous fiscal year. This marks the first decline since the post-Covid period.

Notably, imports from China also witnessed a significant year-on-year decline of 42.44pc to $9.03bn during the months under review.

Pakistan’s exports to Afghanistan contracted 3.28pc to $478.34 million during the 11MFY23 from $494.58m.

Kabul, until a few years ago, held the position of being the second-largest export destination for Pakistan, trailing only the United States. However, it’s important to note that the export figures mentioned exclude the proceeds generated through land routes.

The decline in exports to Afghanistan began in August 2021. In the post-Taliban regime period, the government has permitted imports and exports with Afghanistan to be conducted in Pakistani rupees. However, the figures presented do not encompass the imports conducted in rupees.

Additionally, the government recently authorised barter trade with Afghanistan, Iran and Russia for a select range of items.

Furthermore, the government has granted duty and tax exemptions on the import of tomatoes and onions from Afghanistan and Iran. This has led to a significant increase in the imports of these essential kitchen staples in recent months, aiming to address the shortage in local supplies.

Pakistan’s exports to Iran on the official channel remained at $0.028m in 11MFY23 against no exports last year. Most of the trade with Tehran is carried out through informal channels in border areas of Balochistan.

The government has allowed the import of onions and tomatoes at Taftan and Gwadar border customs stations to meet local demands. Pakistan carried out barter trade with Iran.

The country’s exports to India declined 78.8pc to $0.273m in 11MFY23 from $1.289m in 11MFY22. In the wake of high prices of vegetables in the domestic market because the standing crops of vegetables and cotton were vastly destroyed by floods. There is a strong demand for cotton and vegetable imports through the Wagah border.

Exports to Bangladesh decreased 9.51pc to $709.04m in 11MFY23 from $783.57m in 11MFY22. And Exports to Sri Lanka dipped by 22pc to $264.50m from $339.83m in the same period last year.

On the other hand, Pakistan’s exports to Nepal declined by 48.9pc to $2.769m from $5.420m in 11MFY22. Exports to the Maldives increased by 23.3pc to $7.724m from $6.261m. A marginal export worth $0.048m to Bhutan was recorded in the first 11 months of the current fiscal year against $0.082m exports last year.

Published in Dawn, July 2nd, 2023