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. 

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.  

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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.

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 #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…
Back-From-Dead Firm is Pakistan’s Top Stock With 1,400% Surge
By Faseeh Mangi
August 1, 2021, 6:59 PM PDT
Service Fabrics got new management after a decade of dormancy
Firm raising funds, plans to start two businesses by mid-2023

Pakistan’s best-performing stock belongs to a company that has manufactured nothing for more than a decade.

Service Fabrics Ltd., a listed shell, has rallied about 1,400% over the past year, making it the top performer on the KSE All-Share Index that tracks more than 500 companies. The optimism among traders is because in recent months the firm has found new investors, appointed directors, and got business ventures approved, Chairman Aftab Ahmad Chaudhry said in an interview July 23.

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