The import bill for March was approaching record levels while the trade gap
significantly widened – both worrying signs for the current account balance.
sugar, fertilisers and pesticides, automobiles, mobile phones, and industrial
machinery. The year-on-year increase is 71%, which is also significant because the
full effect of the Covid-19 pandemic was just starting to hit the local and global
economies last March, meaning that demand declines had not fully set in.
This would not be a problem in itself if exports had shown similar growth, but that
was not the case. Exports The import bill stood at $5.66 billion in March, mainly
on account of oil and gas, wheat andincreased 31% to $2.36 billion in March,
which would generally be considered a strong performance if not for the fact that
imports had ballooned.
Analysts have noted that part of the spike in imports is attributable to agricultural
commodities. Pakistan usually exports wheat, sugar, and cotton, but ending up
importing them in recent months due to poor crop yields. In fact, total food group
imports and fertiliser imports both doubled, while significant increases were also
seen in oil and gas and automobiles — the latter almost tripled. A positive in the
import stats was a 72% surge in machinery. However, power generators and cell
phones, rather than industrial machinery, made up a large share of the increase.
Meanwhile, textile exports were up 30%, continuing a recent trend of positive
growth. But the data also shows Pakistan’s dependency on the sector — textiles
made up 60% of total exports. Persisting failure to diversify has made Pakistan
export-commodity-dependent, a negative term for countries where more than
60% of total merchandise exports are composed of commodities. In our case, it is
literally a single commodity.
This does not mean that we need to stop supporting a lucrative sector. It is still a
money-maker with growth potential. What we need to do is diversify so that we
can grow and reduce commodity dependence. In the words of former UN
Conference on Trade and Development Secretary-General Mukhisa Kituyi, “Given
that commodity dependence often negatively impacts a country’s economic
development, it is important and urgent to reduce it to make faster progress
towards meeting the sustainable development goals.”
Source: The Express Tribune, Pakistan Thursday, 22 April 2021