Karachi—Although the government circles claim that the overall domestic economic activities are gaining momentum, as energy and security situation is being improved that sounds true to some extent, however the export sector which provides fuel for the economy is in bad shape and has fallen by 12 per cent in the financial year 2016 according to latest export numbers released by the Central Bank.
Defending the falling exports by giving examples of other counties does not bode well to justify gray areas. Our export oriented industries are lacking from innovation, value addition, brand development and take an easy way to focus on semi finish or in some cases raw forms of natural products like agriculture produce and fruits etc instead of taking initiatives for diversification in products. Besides that a follow up of the departments responsible for export facilitation is equally important for relevant ministries.
A key challenge in Pakistan’s exports is the lack of diversification of products as well as markets. Our exporters are unable to adapt to changing preferences. Labor productivity is low; quality certifications are costly; research, development and branding is not pursued by most entities; and components and processes are not standardized in SME sector. Apart from all these challenges a major factor which stalling our export growth are the corrupt and sycophants who always paint a rosy picture of the exports but most of the time they are on a joy ride of foreign tours at government expenses. Those who are supposed to facilitate exports and economic growth shamelessly ask their share which is a major irritant in the way of export growth in our society.
It is said that exports of most emerging economies have fallen and Pakistan is no exception to this global economic slowdown sounds a lame excuse on the part of the government functionaries. Why those quality products like textile products which are competing well in the export market including, knitwear; ready-made garments, cotton fabrics and towel etc are not affected of the economic slowdown is the question to ponder upon for those who are not producing quality products. One of the positive areas is Real GDP growth which has reached 8-year high of 4.7 per cent in Financial Year 2016; while Inflation has come down to decades low of 2.9 per cent. According to State Bank of Pakistan the current account deficit also shrank significantly; Foreign Exchange reserves doubled during last three year; while Budget deficit from 8.2 per cent of GDP in FY13 is expected to reduce to around 4.3 per cent inFY16. Pakistan is now in a growth phase. We need to capitalize on the improvement in security situation and energy crisis so that we can attract maximum private sector investment. We need to give employment opportunities to young people, which is only possible by giving confidence to the private sector. The SBP officials say due to slowdown in world economic growth, the global remittance market is going through a tough phase.
Average world remittances have declined by 2.7 per cent in 2015 while India, Thailand and Sri Lanka are facing a decline in remittance inflows. Along with Indonesia, Pakistan stands out with about 12 per cent growth in remittance in 2015 compared to 2014. Similar to the past five years, the country has posted strongest growth in remittances that have surpassed their target for fiscal year 2016 and reached almost $20 billion. Socio-economic policies if not peoples friendly create political instability which is not good for the economic health of any country.
In Pakistan’s case, for the last few decades the political stability has always affected the country’s economy. We can always overcome political instability with the support of the people if we design our policies welfare specific and in accordance to the local environment.