ISLAMABAD: Pakistan’s exports to European nations witnessed a 12.13 per cent decline in the first quarter of the current fiscal year compared to the same period last year, primarily due to a reduced demand for Pakistani goods in western and northern Europe.
The export revenue from these countries fell to $1.929 billion in July-September FY24, a noticeable drop from the $2.212bn recorded in the corresponding months of the previous year, according to figures compiled by the State Bank of Pakistan.
This development underscores the challenges faced by Pakistani exporters in these economically uncertain times despite having preferential access to 27-member EU countries.
In FY23, the export of EU dropped 4.41pc to $8.188bn from $8.566bn in the preceding fiscal year. However, the decline in exports was seen despite the Generalised System of Preferences Plus (GSP+) scheme. The scheme became effective on Jan 1, 2014, and it will remain available to Pakistan for the current fiscal year.
Last month, the European Parliament unanimously voted to extend the GSP+ status for another four years until 2027 for developing countries, including Pakistan, to enjoy duty-free or minimum duty on exports to the European market.
Western Europe, which includes countries such as Germany, the Netherlands, France, Italy, and Belgium, accounts for the largest portion of Pakistan’s exports to the EU.
However, there has been a significant 28.36pc decrease in exports to this region. The export value stood at $1.001bn in the first quarter of FY24, down from $1.257bn during the same period last year.
While exports to western and northern Europe have seen a decline, there is a silver lining in the form of an uptick in exports to southern Europe. Specifically, exports to Spain and Italy have seen a marginal increase of 1.62pc, rising to $773m in 3MFY24 from $761.32m during the same months last year.
However, exports to northern Europe have not done as well, recording a 22pc decline. The export value to this region stood at $150.607m this year, down from $194.192m over the corresponding months of the previous year.
Before Brexit, Pakistan’s major export destination was the United Kingdom. In the post-Brexit period, Pakistan’s exports dipped by 0.22pc to $518.803m in 3MFY24 from $519.948m over the corresponding months of last year.
In FY23, Pakistan’s exports dipped by 10.63pc to $1.966bn to UK from $2.20bn in the same period of the preceding year.
The decline in exports to the UK is a discouraging factor. However, exporters fear they will lose the UK market following Brexit. The British government, however, has assured Islamabad of no change in the post-Brexit scenario which is evident from the inclusion of Pakistan in its preferential market access scheme.
In terms of market penetration, the UK is now replaced by Germany under GSP+ and emerged as the top export destination for Pakistani products.
Country-wise data shows that export declined by 20pc to Germany as it stood at $364.446m in 3MFY24 from $456.895m over the previous year.
The second biggest market for Pakistan’s exports is the Netherlands.
Exports to that country went down by 13.18pc to $331.860m in 3MFY24 against $382.241 the preceding year. Both Germany and the Netherlands have emerged as major export destinations for Pakistani goods under the GSP+ scheme.
Published in Dawn, November 10th, 2023
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