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Pakistan Still Need to Address Major Issues to Improve Exports: Bloomberg

Amidst the heated debates between pro-lockdown and anti-lockdown diaspora in the country, findings have emerged that opening the country for economic activity early was indeed beneficial on an economic level.

Bloomberg reported that “Pakistan’s decision to loosen pandemic restrictions early has helped the nation’s exports emerge stronger than its South Asian peers.”

Textiles were the leading export product for Pakistan during the pandemic which, along with other exports, showed faster recovery in outbound shipments, as compared to Bangladesh and India. While Bangladesh’s exports grew by 3.5 percent in the month of September 2020, and India’s grew by 6 percent, Pakistan’s shipments showed growth of 7 percent.

Pakistan was the first country in the region to ease the lockdown. Export units were allowed to reopen in April, following a month-long lockdown. Considering that the rest of the region was still under lockdown, Pakistan’s export sector got the impetus from international brands, such as Guess, Hugo Boss, target, etc. Most internationally renowned brands have the business practice of maintaining long-term suppliers but also keeping an eye out for additional procurement channels. This is what led them to move towards Pakistan when there were lockdowns elsewhere in South Asia.

Adviser to the prime minister on Commerce Abdul Razaq Dawood had also shared the news of such brands moving their orders to Pakistan, through his Twitter page.

Bloomberg quoted All Pakistan Textile Mills Association (APTMA) Secretary-General Shahid Sattar saying,

Pakistan has seen orders shifting from multiple nations including China, India and Bangladesh… Garment manufacturers are operating near-maximum capacity and many can’t take any orders for the next six months.

In addition to the regular export sector activities in Pakistan, from the early period of the pandemic, Pakistan also started to manufacture face masks and personal protective gear for export. The trade war between China and the US also played a part in bringing Pakistan into consideration of companies looking to diversify their supply chains.

This surge in export orders is welcome news for Pakistan’s economy, especially the textile sector, which accounts for approximately 10 percent of the country’s gross domestic product (GDP). However, the looming risks of another lockdown owing to resurge in Covid-19 cases across the country and even less strict measures such as early closing of markets may hamper this growth in exports.

The basic economic challenge of the competitiveness of Pakistani products cannot be ignored either. For the time being, Pakistan seemed to have received a much-needed boost in its export sector, but as per experts, the long-term prospects still show stagnation more than continued growth prospects.

Bloomberg quoted Gonzalo Varela, senior economist at the World Bank saying,

Despite a relatively rapid recovery of exports, following the ease of the lockdown imposed by the Covid-19 pandemic, a long-term view reveals stagnation… Pakistan needs an across the board tariff rationalization to encourage manufacturers to export and the nation to compete with other nations.

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