Import bill surges on higher global commodity prices – Newspaper

ISLAMABAD: Pakistan’s trade deficit widened 57.85 per cent in 11 months of FY22 to $43.33 billion year-on-year on account of a broad-based surge in global commodity prices, Covid-19 vaccine imports, and demand-side pressures, all contributed to the rising imports.

The imports surged mainly by an increase in energy prices as well as imports of food items to bridge the shortages in the local production of agriculture yields, showed Economic Survey 2021-22 on Thursday.

Remittances, which always supported in easing out pressure of trade deficit recorded a 7.1pc growth to $22.9bn on a year-on-year basis. This ever-highest level of workers remittances was not sufficient to offset trade deficit.

According to survey due to pro-business measures and recent rupee depreciation, exports marked an impressive growth of 27.78pc year-on-year to $28.84bn in July-May FY22. Around two-thirds of the increase came from the textile sector, especially from the high value-added segment.

Pakistan’s textile exporters capitalised on the policy support available –including the SBP’s concessionary refinance schemes for working capital and fixed investment, and the regionally competitive energy tariffs and managed to ship higher volumes to key destinations–such as the US, UK and EU.

Higher cotton prices also helped to increase the export unit prices both low and high value-added textile products. Apart from textiles, rice exports also rebounded during FY22, mainly due to the non-basmati variety.

The growth in textile sector was achieved despite global logistical crisis and rising freight cost elevated the landed cost of imported cotton in Pakistan, which is eventually being factored into exports unit prices of finished goods like apparel and textile.

Containers freight rates increased dramatically between January 2019 and March 2022. The year 2021 saw an especially steep increase in global freight rates, reaching a record price of over $10,800 in September 2021. Whereas, on year-on-year the global freight rate index increased by 68.3pc to $8,200 in March 2022 as against $4872 in March 2021.

Published in Dawn,June 10th, 2022

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