Growth prospects remain positive despite increase in exports

Exporters are sensing trouble as Pakistan’s merchandise exports declined for the second consecutive month to close out 2024. As per data from the Pakistan Bureau of Statistics (PBS), the fall in exports can be attributed to a sharp decline in international demand for goods.

Despite a decline in export figures, it is important to highlight that total exports have not declined. Instead, their growth rate has fallen.

The reduced level of export growth is predicted to end soon. According to Dawn News, the demand for Pakistani goods is expected to increase in North America and European countries from January onwards.

The past year saw exporters post respectable figures as exports started growing in July. This trend of rising exports was because of a greater volume of international orders and a stable Rupee.

Pakistan witnessed exports grow by double digits throughout July-September, with growth rates surging by as high as 16 per cent in August. However, November saw the export growth rate fall to 8.98 percent, while December witnessed an abysmally low of 0.67 percent.

The positive export trajectory can be partially attributed to Commerce Minister Jam Kamal Khan’s extensive efforts to boost exports. Islamabad had a motivation to boost exports as it could not have tolerated a high trade deficit at a time when the nation was already strapped for cash. The outflow of foreign reserves due to a trade deficit would create significant issues for the economy.

Exports in December climbed up to $2.84 billion after growing by 0.28 percent on a month-on-month basis. The export revenue in December was $20 million higher than the corresponding month in 2023.

While the growth rate is declining on a month-on-month basis, it is important to highlight how export revenues surged past $16 billion in the first half of FY 2024-25. Compared to the same period last year, the export revenue has grown by 10.52% as exports stood just a little under $15 billion.

Interestingly enough, it might not be Pakistani exporters or the Minister of Commerce who will help increase the growth rate of exports again. Instead, Pakistani exports may rise once President-elect Donald Trump takes office.

The reasoning here is that experts are predicting that Donald Trump might impose tariff increases on the USA’s trading rival, China. For Pakistani businesses, this spells great news as they will be able to attract buyers from the USA who had previously purchased from China.

In an interview with Dawn, Pakistan Textile Exporters Association Patron in Chief Khurram Mukhtar revealed that retailers and buyers from the USA were already visiting Pakistan to place orders.

If Donald Trump follows through with his threat of increasing tariffs on Chinese goods, Pakistani exporters might benefit