Coronavirus has proven deadly, causing more than 300,000 deaths within a short span of five months since the first fatality was reported in Wuhan, China, in early January. It has wreaked havoc on major world economies. Apart from China, affected western countries reporting the highest death rates include the United States, United Kingdom, Italy, Spain, France and Germany.
During these times, the United States of America (USA) remained the top export destinations of the Pakistani products during the eleven months of current financial year (2019-20), followed by China and United Kingdom (UK). The total exports to the USA during July-May (2019-20) were recorded at US $ 3588.819 million against the exports of US $ 3727.390 million during July-May (2018-19), showing negative growth of 3.71 percent during the period under review, according to State Bank of Pakistan (SBP).
This was followed by China, wherein Pakistan exported goods worth $ 1535.454 million against the exports of $1701.506 million last year, showing decrease of 9.75 percent.
UK was the at third top export destination, where Pakistan exported products worth US $ 1491.000 million during this year against the exports of US $ 1622.887 million during last year, showing decrease of 8.12 percent, SBP data revealed.
With textile and leather industries making up a majority of exports from Pakistan, policies towards economic revival in the affected western countries would influence the pace at which demand for Pakistani products reaches pre-coronavirus levels. Their economic revival will be crucial to Pakistan’s exports.
Pakistan reported a significant dip in its exports between 2013 and 2016. Exports had dropped from $25.1 billion in 2013 to $20.5bn in 2016. Since then, exports had been on an upward trajectory, rising 5.1pc a year to reach $23.8bn in 2019. The most prominent increase however was in apparel and cereals exports, at 8.2pc and 11.3pc, respectively.
Figures published by the Pakistan Bureau of Statistics (PBS) reveal a sharp contraction in exports since March 2020. The exports in April 2020 decreased to $960 million, a 54pc reduction compared to April 2019. Exports of knitwear, bedwear and ready-made garments were also adversely impacted in March 2020. But exports of surgical goods and instruments and certain leather products (such as gloves) reported positive growth rates in March 2020, both month-on-month as well as year-on-year.
The initial lockdown in Pakistan and elsewhere may have abruptly thwarted regular transactions, the shipment of final goods and the transfer of payments from foreign buyers. It is obvious that the exports from Pakistan will be significantly impacted over a longer period of time. The impact of the lockdown in Pakistan may have contributed significantly to the dip as well.
The trend in export figures over the next few months, however, would reveal a better picture of the impact of the trade plunge itself as lockdown in Pakistan is lifted. Also, export bans imposed on selected items are likely to reduce exports.
Pakistani exporters must develop strategies to mitigate the adverse impact from the crisis by targeting a range of products that may reveal potential but are within the range of their own core competencies. For instance, textile exporters successfully shifting towards production of personal protection equipment and face masks may report a spike in their export activity.
