ISLAMABAD: Pakistan’s merchandise exports posted double-digit growth during February reversing the declining trend.

Trade analysts believe the growth is due to global diversion of orders from China owing to the spread of coronavirus in the country.

The drop in exports’ proceeds had started since December 2019 when it fell by 3.8 per cent while a similar quantum of decline was seen in January. The February figures showed a 13.6pc growth over the last year, data released by the Commerce Division showed on Monday.

The Pakistan Bureau of Statistics usually releases official figures at the end of first week of every month. However, the Adviser to PM on Commerce Razak Dawood shared provisional data of customs only on Monday.

In February, the export proceeds edged up to $2.13 billion from $1.88bn over the corresponding months last year, showing an increase of 13.61pc. In rupee terms, the export proceeds posted a growth of 26.9pc during the month under review.

Between July 2019 and February, the export proceeds’ grew up by 3.62pc as it stood at $15.64bn against $15.09bn over the corresponding months last year.

An official source said that the increase in exports is due to diversion of orders especially textile and clothing from China by several countries in Europe and North America due to Coronavirus. The textile sector has received excessive orders in February, the official said, adding it depends whether the orders will be placed in coming months or not.

The government projects exports during the ongoing fiscal year to reach $26.187bn from $24.656bn in FY2019.

In the 2019-20 budget, the government reduced cost of raw materials and semi-finished pro­ducts used in exportable products by exempting them from all customs duties. The government also promised to provide sales tax refund to export sectors.

The Commerce Division’s main focus is on negotiating and seeking preferential market access, but it has not been linked with the domestic production line.

The large-scale manufacturing sector of the country has already been in negative growth since July 2019 but still the ministry’s focus is on negotiations for international trade agreements and market access.

The commerce and textile divisions are yet to finalise the much-awaited industrial and textile policies despite several deadlines.

On the external side, imports are still dropping, which is providing some breathing space despite paltry growth in exports from the country.

The country’s trade deficit came down by 27.05pc in the first eight months of current fiscal from a year ago. The decline is mainly due to a double-digit fall in imports. Another reason is the government’s corrective measures to slow down imports to reduce pressures on foreign exchange reserves and slump in overall demand.

In absolute terms, the trade gap narrowed to $15.65bn in July 2019 to February from $21.46bn over the corresponding months last year. On a monthly basis, the deficit fell by 19.67pc to $1.81bn in February from $2.26bn during the same month last year.

The Ministry of Commerce estimates that the annual trade deficit may decrease by $12bn to $19bn in the ongoing fiscal year from $31bn during the last fiscal.

The data showed that imports in the first eight months of current fiscal year clocked in at $31.3bn, down by 14.39pc from $36.56bn during the same period last year. The decline in value of imported goods in February was 4.56pc to $3.95bn against $4.14bn during the same month last year.

The trend shows that the quantum of decline in imports is reducing with each passing month. This shows that the imports will stagnate to the tune of around $4bn per month in the next few months.

Published in Dawn, March 3rd, 2020