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The Global GDP growth according to the WTO forecast for April 2023, was expected to be 2.4 per cent in 2023. Both trade and growth are below the last 12 years averages of 2.6 and 2.7 per cent, respectively. In this situation, countries need to have strong trade integrations besides abstaining from trade barriers. The trade growth was projected to be 1.7 per cent in 2023, higher from earlier forecast of 1.0 per cent in October 2022.

The slowdown in trade growth was because of weak global demand in 2022. A similar situation can also be observed in the regional countries. For instance, China’s trade volume deteriorated significantly in the latter half of 2022, because of lower demand for Chinese goods, and weak domestic demand on account of the zero Covid policy. Besides, high inflation in trading partners is another main factor that is affecting the Chinese exports in 2023.

Economists revealed that exports in Pakistan for many years, have been falling and last year this shrinking phenomenon became very acute. For the fall in exports, there are various elements responsible but the issue is that nothing was done to rectify this condition and now it appears that matters have been damaged irretrievably as it is the main accountability of the authority to increase exports through effective policy measures. It must be kept in view that the deficit process could only be halted and subsequently reversed once a balance is achieved between imports and exports.

The condition facts showed, is that the merchandise exports fell for the 11th month in a row in July, plunging by 8.6 per cent year-on-year to $2.05 billion. Due to internal and external factors stoking up fears about the closure of industrial units, especially textile and clothing the export proceeds are declining. In the current year, the merchandise exports were dipped by 12.71 per cent to $27.54 billion from $31.78 billion the previous year missing the $32 billion target by a wide margin of $4.46 billion.

The Government of Pakistan has projected an export target of $30 billion for the current fiscal year. In July 2022 the exports started posting pessimistic growth, barring August when a slight rise was registered due to the backlog of the preceding month. In balancing Pakistan’s external account export contraction is a worrisome factor that will create issues. Statistics showed that the drop in textile and clothing was one of the main factors for the decline in overall exports in the current year, which constitutes over 60 per cent of total exports.

In the current year, it became tough for exporters to import raw materials and procure other inputs locally. The State Bank of Pakistan (SBP) imposed restrictions on LCs which led to a decline in exports. Sales tax, deferred sales tax, income tax, drawbacks of local taxes and levies, technology upgradation fund and duty drawbacks, capital shortages and liquidity crunch are being considered the root causes of the export decline.

According to the Government of Pakistan, the potential export growth is hindered owed to a lack of diversification in export goods. The trend of Pakistan’s exports of major items remains more or less the same having concentrated on three items, namely cotton manufactures, leather and rice. These three categories account for 68.1 per cent of total exports during July-March FY2023. Among these few items, cotton manufacturers remain major contributors with 57.3 per cent share in total exports, followed by leather (3.2 per cent), rice (7.6 per cent) and other items (31.9 per cent). This pattern shows that Pakistan’s export is still exporting a few items.

Economists recorded that the USA remained the top export destination for Pakistan with $447.61 million worth of shipments in June against the exports of $491 million in the preceding month, recording a fall of 8.84 per cent MoM. However, on a yearly basis, Pakistan’s exports to the USA declined by 30.63 per cent YoY as against $645.29 million in June 2022.

In terms of volume, the UK appeared as the second major destination country during the month, herein Pakistan exported goods worth $159.97 million, showing a fall of 1.58 per cent MoM and 15.45 per cent YoY. This was followed by China, wherein the total exports to the country during the period under review at $137.13 million from the exports of $190.99 million registered in the last month, showing a fall of 28.19 per cent MoM and 42.54 per cent YoY.

Next in line are the Netherlands (Holland) and UAE (Dubai) wherein Pakistan received export earnings of $121.97 million and $119.15 million during the month, respectively. Exports to the Netherlands (Holland) recorded a rise of 7.63 per cent MoM, while exports to UAE (Dubai) went down by 2.48 per cent MoM. Among other countries, Pakistani exports to Germany during June 2023 stood at $111.69 million, down by 8.75 per cent MoM, followed by Spain and Italy with $103.57 million and $98.6 million respectively.

During the twelve months of the fiscal year i.e. July-June FY2023, the USA remained the top destination of Pakistan’s exports with $5.93 billion, depicting a fall of 14.83 per cent when compared to the corresponding period last year. This was followed by China and the UK. The exports to China during FY2023 were registered at $2.03 billion, down by 37.16 per cent YoY while exports to the UK, the third top export destination, declined by 11.94 per cent YoY to $1.97 billion from $2.20 billion in the same period the previous year.