Académique Documents
Professionnel Documents
Culture Documents
103
Economic Survey 2010-11
The meat exports escalated to $123.0 million as a April 2010-11 which offset the lower quantum of
result of increased demand from Saudi Arabia rice exports. Resultantly, rice export proceeds
coupled with the higher prices of meat exports managed to reach at $ 1,775 million with 8.8
during July-April 2010-11. percent stake in overall export.
On the other hand, the rice could not sustain the Textile sector benefitted from inordinate spike in
previous years’ export growth and declined by 2.1 prices and the textile’s share in overall exports
percent during July-April 2010-11 over the increased to 55.3 percent in July-April 2010-11 as
corresponding period last year mainly due to against 53.5 in 2009-10. Textile exports have
massive fall in the domestic supplies of rice as increased by $2,706 million in absolute terms.
devastated floods damaged 0.876 million hectares The current year’s performance of textile
out of 2.642 million hectares land planted in remained broad based as both the high and low
Kharif season. Furthermore, pest attack, disease & value added contributed to the overall growth in
logging of early sown crops also contributed to textile group mainly because of increase in unit
the decrease in rice production. Notwithstanding values of all categories of textile during July-April
falling international prices, rice remained 2010-11 over corresponding period of last year
expensive by 10.2 percent on average during July- [See Fig-8.1].
40
20
0
-20
-40
-60
COTTON YARN
COTTON CARDED
YARN
BED WEAR
TENTS,CANVAS
RAW COTTON
COTTON CLOTH
KNITWEAR
TOWELS
READYMADE
SYN TEXTILE
ART,SILK &
GARMENTS
& TARPULIN
The impact of rising international prices is more increased by 8.9 percent and 8.1 percent,
pronounced in cotton based textile group among respectively during the period.
all categories of textile sector exports. Moreover,
higher external demand especially from EU and Exports of other manufactures grew by 8.6
US combined with improved availability of raw percent during July-April 2010-11 and its share
material inputs also played a significant role in more or less stagnated at 16.1 percent in total
overall increase in textile export receipts. Textile exports. The sector has contributed 5.8 percent to
sector also benefited from the currency this year overall increase in exports. The major
appreciation and increased labor cost in its contributors behind the positive growth of other
competitor countries. manufacturers’ include; chemicals & pharm
products, leathers, sports goods and engineering
Export of petroleum group increased by 32.6 goods. Major contributing factors include,
percent in this period (July-April 2010-11). In improved unit values (export prices), increased
absolute terms petroleum group witnessed an demand of these categories and addition of new
increase of $ 267.7 million mainly on the back of export destinations as part of market
higher unit prices of petroleum products (27.5 diversification. Owing to these factors, chemicals,
percent) and petroleum top naphta (13.5 percent). leather, sports and engineering goods collectively
The quantum export of these two items has also added $353.2 million in the overall export
104
Trade and Payments
increase. This increase in exports receipts was East, increased competition from Saudi Arabia
offset to some extent by negative growth of and fall in exports to India. Resultantly, the
Jewellary (20.2 percent) and Cement (9.9 percent) quantity exported of cement declined by 8.7
during July-April 2010-11 primarily because of percent and unit value witnessed a negative
lower import demand of cement from Middle growth of 1.2 percent during the period.
105
Economic Survey 2010-11
2,000
$ Million
1,500
1,000
500
Apr
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Concentration of Exports export goods to make it more guarded against
external shocks. Furthermore, the share of cotton
Notwithstanding, phenomenal increase in exports,
manufacturers during July-March 2010-11
it remained concentrated in few items like cotton
increased by 1.2 percentage points over the
manufacturers, leather and rice [Table-8.2] as
corresponding period last year. The concentration
these three categories accounted for 66.3 percent
of exports is changing though at a painfully
stake in total exports during July-March 2010-11.
slower rate as the share of other items in overall
Out of this 66.3 percent share in total exports, the
exports increased from 26.7 percent in 2005-06 to
80.0 percent consist of cotton manufactures
33.7 percent in July-March 2010-11 showing that
thereby making the concentration more intense.
country has the potential for diversification in
This also reinforces the need for diversification in
exports which need to be accelerated.
Table 8.2:Pakistan’s Major Exports (Percentage Share)
July-March*
Commodity 05-06 06-07 07-08 08-09 09-10
09-10 10-11
Cotton Manufacturers 59.4 59.7 51.9 52.6 50.6 51.8 53
Leather** 6.9 5.2 5.8 5.4 4.5 4.4 4.4
Rice 7.0 6.6 9.8 11.2 11.3 11.5 8.9
Sub-Total of Three Items 73.3 71.5 67.5 69.2 66.4 67.7 66.3
Other Items 26.7 28.5 32.5 30.8 33.6 32.3 33.7
Total 100 100 100 100 100 100 100
*Provisional Source: FBS
** Leather & Leather Manufactured
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Trade and Payments
primary commodities exports increased from 11.0 economic transformation and raises serious
percent in 2005-06 to 18.0 percent during July- question about productive capacity of the
March 2010-11. The shift is in contradiction of economy and de-industrialization.
Imports
USA continues to be the most favourite export
destination with 16.1 percent share in overall Merchandise imports increased to $ 32.3 billion in
exports when its share in overall exports is July-April 2010-11 as against $ 28.1 billion in the
exhibiting continuous fall since 2005-06 mainly comparable period of last year, thereby showing
due to weakening economic activity in the US an increase of 14.7 percent. The overall import
amidst global financial crisis. On the other hand, bill is higher by $ 4.1 billion, reflecting the impact
Afghanistan is emerging as an important export of higher global crude oil and commodity prices.
market for Pakistan as its share is persistently With the exception of machinery group, the higher
rising during the period under review [Fig- 8.3]. import bill is contributed by food group ($ 1,528
million), petroleum group ($ 678.3 million),
consumer durables ($ 247 million), raw material
107
Economic Survey 2010-11
group ($ 1,039 million), telecom ($ 245 million) 11 and country has to incur expenditure of $681.4
and on other items group ($ 951 million). The million during the period. The import bill of
price and quantity effects worked in the same edible oil increased by 57.4 percent and has added
direction; however price effect remained stronger $ 605.6 million to this year’s import bill. Palm oil
than quantity effect. The imports excluding imports surged in quantity, value and per unit
petroleum group grew by 17.3 percent and value terms as they increased by 16.1 percent,
excluding petroleum and food grew by 11.2 53.7 percent and 32.3 percent, respectively. The
percent. This implies dominant role of food higher import bill of palm oil is culmination of
imports on import growth. higher international price, higher domestic
demand and reduction in import duty on palm oil
Fig-8.3: Exports Markets (% Share) during the period, thereby in absolute terms palm
26 10 oil import bill increased by $558.6 million in July-
USA Afghanistan
24 9 April 2010-11.
8
22 Import of petroleum group grew by 8.4 percent
7
20 during July-April 2010-11 mainly reflecting the
6
impact of spike in international oil prices as per
18 5 unit values of petroleum crude increased by 23.6
16 4 percent. In addition to that, quantity import of
05-06 06-07 07-08 08-09 09-10 Jul-Mar crude oil also increased by 10.6 percent during
10-11 July-April 2010-11. The increase in petroleum
Source: FBS
import bill is evident from international monthly
average prices of oil which surged from $ 76 per
Further analysis indicates that food group imports barrel in July 2010 to $ 123 per barrel in April
accounting for 13.4 percent of total imports, 2011 thereby showing an escalation of 61.2
showed a massive growth rate of 54.9 percent percent during the period [See Fig-8.4]. The
during July-April 2010-11. Within food group impact of this phenomenal increase in
import, the major contribution came from sugar, international oil prices will be more visible in the
edible oil and pulses [See Table-8.5]. The coming months in import bill of petroleum group
domestic shortfall in sugar production necessitates as there is a time lag of around three months. The
import of 1.1 million tons of sugar resulting in quantity is also started to increase beyond
growth of 262.9 percent during July-April 2010- February 2011.
115
95
$/Brl
75
55
35
Dec
Dec
Mar
Jun
Sep
Mar
Jun
Sep
Mar
Jun
Sep
Mar
Jun
Sep
Mar
Dec
Dec
The import of consumer durables added $ 247 mainly because of inordinate rise in prices of
million to overall import bill of July-April 2010- cotton and sugarcane led to higher domestic
11. The huge injection of money in the rural areas demand to import road motor vehicle which
108
Trade and Payments
increased to $ 1,080 million in July-April 2010-11 import declined by 52 percent during July-April
as compared to $951 million in the comparable 2010-11 over the corresponding period last year.
period of last year, thereby showing growth of
13.6 percent. Relatively small group electric Telecom imports grew by 40.8 percent during the
machinery and appliances also added $ 118 first ten months of the current fiscal year 2010-11
million during July-April 2010-11 against the and in absolute term the import in telecom sector
corresponding period of last year. witnessed an increase of $245 million. Most of the
increase in overall telecom imports has been
Import of raw material group surged by 15.7 contributed by mobile phone imports which grew
percent and accounting for 23.7 percent of total by 75.5 percent and added $188 million during
imports during the period of July-April 2010-11. July-April 2010-11 from the corresponding period
Within raw material imports, raw cotton with 2.6 last year. This increase may be the result of
percent stake in overall imports and 11.1 percent increasing demand for mobile phone as higher
share in raw material group increased in absolute purchasing power in increasing nominal income in
terms by $ 354 million mainly due to shortages in rural areas.
domestic production of raw cotton owing to
unprecedented flood. Lower domestic supplies Machinery group import decreased to $3,480
were compensated by increasing the import of raw million during first ten months of the current
cotton (8.4 percent) combined with rising import fiscal year 2010-11 as against $4,028 million in
price of cotton as evident from increased unit the corresponding period last year. Among the
value (58.3 percent) of raw cotton during the different items of machinery group, only textile
current fiscal year 2010-11. Other items like machinery and office machinery imports
synthetic fibre, synthetic & artificial silk yarn and witnessed positive growth. Buoyancy in textile
plastic material on absolute terms collectively sector resulted in massive growth of 78.4 percent
added $616 million to the import bill of July-April in textile machinery imports. Furthermore, the
2010-11. The prominent decline witnessed in the 13.6 percent decline in machinery group imports
imports of fertilizer manufactured due to higher is a reflection of weaker economic activity in the
domestic production as quantity of fertilizer country.
Table 8.5: Structure of Imports ($ Million)
July-April Absolute
Particulars % Change Share
2009-10 2010-11* Increase
A. Food Group 2,784.7 4,312.5 54.9 1,527.8 13.4
Milk & milk food 67.8 129.4 91.0 61.6 0.4
Wheat Unmilled 35.4 5.2 -85.4 -30.3 0.0
Dry fruits 67.8 73.5 8.5 5.7 0.2
Tea 227.8 288.3 26.6 60.5 0.9
Spices 61.0 91.1 49.5 30.2 0.3
Edible Oil (Soyabean & Palm Oil) 1,054.7 1,660.3 57.4 605.6 5.1
Sugar 187.7 681.4 262.9 493.6 2.1
Pulses 209.4 342.6 63.6 133.1 1.1
All Other Food Items 873.1 1,040.7 19.2 167.7 3.2
B. Machinery Group 4,028.0 3,479.6 -13.6 -548.4 10.8
Power Gen. Machines 1,253.5 858.9 -31.5 -394.7 2.7
Office Machines 186.0 194.1 4.3 8.1 0.6
Textile Machinery 223.0 397.8 78.4 174.8 1.2
Const. & Mining Mach. 142.0 98.9 -30.4 -43.2 0.3
Aircraft Ships and Boats 709.0 601.4 -15.2 -107.7 1.9
Agri. Machinery 179.6 77.7 -56.7 -101.9 0.2
Other Machinery 1,334.8 1,250.9 -6.3 -83.8 3.9
C. Petroleum Group 8,087.6 8,765.9 8.4 678.3 27.2
109
Economic Survey 2010-11
July-April Absolute
Particulars % Change Share
2009-10 2010-11* Increase
Petroleum Products 5,274.4 4,918.3 -6.8 -356.1 15.2
Petroleum Crude 2,813.3 3,847.6 36.8 1,034.4 11.9
D. Consumer Durables 1,500.5 1,747.8 16.5 247.3 5.4
Elect. Mach. & App. 549.9 667.6 21.4 117.7 2.1
Road Motor Veh. 950.5 1,080.2 13.6 129.7 3.3
E. Raw Materials 6,605.7 7,645.1 15.7 1,039.4 23.7
Raw Cotton 493.4 846.9 71.7 353.5 2.6
Synthetic fibre 290.4 464.2 59.8 173.7 1.4
Silk yarn (Synth & Arti) 287.5 444.7 54.7 157.1 1.4
Fertilizer Manufactured 731.6 439.6 -39.9 -292.0 1.4
Insecticides 120.4 122.3 1.6 1.9 0.4
Plastic material 978.0 1,263.3 29.2 285.4 3.9
Iron & steel and Scrap 383.4 405.9 5.9 22.5 1.3
Iron & steel 1,017.9 993.0 -2.4 -24.9 3.1
Other Chemical Products 2,303.0 2,665.3 15.7 362.3 8.3
F. Telecom 599.1 843.8 40.8 244.7 2.6
G. Others 4,516.9 5,468.3 21.1 951.4 16.9
Total 28,122.4 32,262.9 14.7 4,140.5 100.0
Excluding Petroleum Group 20,034.8 23,497.0 17.3 3,462.3 72.8
Excluding Petroleum & Food Groups 17,250.1 19,184.5 11.2 1,934.4 59.5
* Provisional Source: FBS
110
Trade and Payments
$ Million
exhibits that majority of Pakistan’s imports
consists of raw material for consumer goods 3,000
[Table-8.7]. More recently, the share of import for 2,700
consumer goods increased to 16 percent in July-
March 2010-11 from 13 percent last year. 2,400
However, the share of capital goods declined from 2,100
28 percent in July-March 2009-10 to 25 percent in
Jul
Aug
Sep
Nov
Dec
Jan
Feb
Mar
Apr
Oct
July-March 2010-11.
111
Economicc Survey 2010
0-11
Fig
g 8.6: Month Wise
W Trade Deeficit 2009-10 2010-11
1,800
1,600
1,400
$ Million
1,200
1,000
800
600
Jul
Aug
Nov
April
Sep
Oct
Dec
Jan
Feb
Mar
112
Trade and Payments
composition of the deficit, but also the way it is improvement in trade account was mainly driven
financed. by fall in imports during last year but this year’s
improvement was predominantly the result of
During July-April 2010-11, the current account robust growth of 27 percent in exports during this
deficit turned to surplus of $748 million from period. The improvement in the trade account was
deficit of $3,456 million in the comparable period supplemented by improvements in current
of last year [See Table-8.10]. This year’s transfers, services and income accounts. In
improvement in current account is broad based as particular, current transfers recorded growth of
improvement witnessed across the board in all 23.9 percent during July-April 2010-11 and stood
sub-components including balance of goods, at $ 12,846 million. The improvement in the
services and income account while buoyancy in current transfers is mainly owes to remarkable rise
current transfers helped current account to turn it in the workers’ remittances and other private
into surplus in the form of higher export growth, transfers.
strong and sustained inflows of workers’
remittances, logistic support related receipts and Decline in services account deficit by 28.2 percent
grants received for flood relief. In the backdrop of during July-April 2010-11 was the result of 24.7
improvement in all sub groups, the current percent growth in services exports that outpaced
account absorbed commodity and oil price shock 6.6 percent growth in services imports. Robust
of high intensity without impacting exchange rate growth in services exports came from logistic
or foreign exchange reserves. support receipts ($743 million), transportation
($1,188 million), travel ($289 million) and other
Unlike the current account, the financial account business services ($573 million). Due to increased
surplus deteriorated and reached to $412 million receipts under logistic support, the share of
during July-April 2010-11 as compared to $3,533 government services exports increased by 5.3
million in the corresponding period last year. percentage points during July-April 2010-11 and
Notwithstanding, lower surplus in the capital and its share in overall services exports was 45.3
financial account, the overall external balance of percent. On the other hand, import of services
the country witnessed a surplus of $ 1,210 million grew by 6.6 percent during July-April 2010-11.
during July-April 2010-11. This development in The major contribution to this increase in import
overall external account balance mainly came services came from expenditure on transportation
from improvement in the current account balance group which in absolute term added $ 331 million
and also complemented by surplus in the capital to the import bill during July-April 2010-11 as
and financial account. compared with the corresponding period last year.
Income account deficit declined by 6.7 percent
Within the current account, deficit in trade during July-April 2010-11 over the same period
account contracted by 10.8 percent during July- last year mainly due to lower investment and
April 2010-11 over the last year which remained interest outflows.
at $8,285 million. Encouragingly, the
Table 8.10: Summary Balance of Payments ($ Million)
July-June July-April
Items
2008-09 2009-10 2009-10 2010-11*
Current Account Balance -9,261 -3,946 -3,456 748
Trade balance -12,627 -11,536 -9,292 -8,285
Goods: Exports 19,121 19,673 16,167 20,526
Goods: Imports 31,747 31,209 25,459 28,811
Services Balance -3,381 -1,690 -1,937 -1,392
Services: Credit 4,106 5,229 3,740 4,662
Services: Debit 7,487 6,919 5,677 6,054
Income Account Balance -4,407 -3,282 -2,594 -2,421
Income: Credit 874 561 469 562
Income: Debit 5,281 3,843 3,063 2,983
113
Economic Survey 2010-11
July-June July-April
Items
2008-09 2009-10 2009-10 2010-11*
Current Transfers Net 11,154 12,562 10,367 12,846
Of which:
Workers remittances 7,811 8,906 7,307 9,046
Capital & Financial Account 6,087 5,272 3,687 498
Capital Account, 455 175 154 86
Financial Account 5,632 5,097 3,533 412
1. Foreign Investment 2,622 2,010 1,605 1,491
FDI (Net) 3,695 2,075 1,653 1,193
FPI -1,073 -65 -48 298
2. Foreign Long Term Loans 1,897 2,210 1,472 333
Disbursements 4,753 4,085 3,020 1,964
Amortization 2,856 1,875 1,548 1,631
Net Errors and Omissions 118 -60 499 -36
Overall Balance -3,056 1,266 730 1,210
Reserves and Related Items 3,056 -1,266 -730 -1,210
Reserve Assets -635 -4,063 -2,159 -1,010
Use of Fund Credit and Loans 3,691 2,174 1,106 -200
Exceptional Financing 0 623 323 0
*: Provisional Source: SBP
Quarter-wise analysis of current account balance over the one billion for second consecutive month
suggests that with the exception of first quarter in April 2011[Fig-8.8] which has boosted
July-September 2010-11, current account optimism about workers’ remittances to cross the
witnessed surplus during second and third $11 billion this year. Pakistan Remittance
quarters. Furthermore, current account surplus Initiative (PRI) has removed many irritants and
($716 million) during the month of April 2011 incentivizes routing of remittances through former
remained 95.0 percent of surplus witnessed during channel.
July-April 2010-11.
Fig-8.8: Monthly Worker's Remittances
1100
Fig-8.7: Monthly Current Account Balance
1000
800 900
2009-10 2010-11
$ Million
600 800
700
400
600
$ Million
200 500
0 400
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
-200
-400
-600
-800
Workers’ remittances totaled $9.1 billion in July-
April 2010-11 as against $7.3 billion in the
Jul
Aug
Sep
Nov
Jan
Feb
Mar
Apr
Oct
Dec
114
Trade and Payments
115
and circular debt issue which constrained business
Financial Account
operations. On the other hand, financial business
Net inflows in the financial account declined to recorded year-on-year increase of 24.3 percent
$412 million in July-April 2010-11as against growth and its share in overall FDI increased by
$3,533 million during the same period last year. 5.7 percentage points.
The massive decline in inflows is unevenly
contributed by debt creating and non-debt creating Foreign Exchange Reserves
inflows. The massive fall in disbursement of loans
The rising trend in Pakistan’s foreign exchange
is witnessed. The inflow of disbursements of long
reserves continued unabated since 2008-09 [Fig-
term loans stood at $1964 million in July-April
8.9] and reached to $17.1 billion by end-April
2010-11 as compared to $3020 million in the
2011. Out of $17.1 billion, reserves held by SBP
comparable period of last year. Amortization
stood at $13.7 billion and by banks stood at $3.4
payments witnessed some upsurge and resultantly
billion.
net inflow of loans stood at $333 million as
against $1472 million in the comparable period of During July-April 2010-11, the improvement in
last year. On the other hand non-debt creating the reserve position was due to inflows of $451
inflows registered negative growth of 7.1 percent million from the IMF under the Emergency
by declining to $1491 million from $1605 million. Natural Disaster Assistance (ENDA) and $743
Portfolio investment provided a cushion against million received under coalition support fund
worsening of financial account and recorded (CSF), thereby increasing the SBP reserves. SBP
inflow of $298 million as against outflow of $48 reserve position was also helped by lower
million. FDI component registered much of the outflows due to shifting of oil payments to inter-
decline in non-debt creating inflows. bank market. Inflows in the scheduled bank also
improved on account of healthy remittances and
Foreign Direct Investment
exports growth.
Foreign direct investment (FDI) declined by 28.7
percent during July-April 2010-11 as a result of Fig 8.9: Gross Foreign Exchange Reserves
fall in equity capital and reinvested earnings. The
18
decline in FDI in Pakistan mainly led by the SBP Banks
domestic factors such as deteriorated law & order 16
situation, energy crises, circular debt issues and 14
S Billion
116
Trade and Payments
rupee vis-à-vis the US dollar both in the inter- dollar during 2009-10 as compared to 15.7 percent
bank and open market. Exchange rate averaged depreciation recorded in the previous year. Pak
Rs. 83.7 in fiscal year 2009-10 and Rs. 85.3 to a Rupee exchange rate with other currencies is
dollar in June 2010. During July-April 2010-11, determined through cross rates based on the
the Pakistan’s rupee against US dollar depreciated movement of the US Dollar against these
by 2.2 percent against the 6.6 percent depreciation currencies in the foreign exchange markets. Pak
in same period last year. This comparative rupee appreciated 5.2 percent against the pound
stability in rupee mainly owes to improvement in and 10.1 percent against euro. Japanese yen
country’s overall external account surplus position appreciated against the US dollar in the
during the period. international market thus, consequently rupee
depreciated against the yen by 12 percent during
Month wise analysis suggests that the major the year. Despite depreciation against the dollar
contribution to 2.2 percent depreciation during and the yen, Pakistan’s currency appreciated by
July-April 2010-11 came from initial months of 10.2 percent in real terms during 2009-10 against
the year when rupee came under pressure due to 0.3 percent depreciation recorded in the previous
mismatch in inflows and outflows as oil year.
marketing companies had made payments for the
import of crude oil. More importantly the trend in July-April 2010-11
is not very much encouraging because most
Fig 8.10: Monthly Average Exchange Rate international currencies have bounced back
86 against US dollar. Resultantly, as rupee
83 depreciated against US dollar by just 0.27 percent,
80
its depreciation against other currencies is
Rs per US$
77
74 massive. Rupee depreciated by 10.9 percent vis-à-
71 vis Euro followed by pound sterling (5.7 percent)
68
65
and Japanese yen (7.0 percent). Overall NEER
62 depreciated by 6.1 percent, however, the REER
59 appreciated by With SBP no more intervening in
Apr
Apr
Apr
Jul 07
Oct
Jan
Jul 08
Oct
Jan
Jul 09
Oct
Jan
Jul 10
Oct
Jan
Apr 11
-600
competitiveness of a country and therefore has 95.0 -800
assumed greater importance within external sector -1000
July-08
Jul-09
Jul-10
Jan-07
Oct-07
Jan-08
Apr-08
Oct-08
Jan-09
Apr-09
Oct-09
Jan-10
Apr-10
Oct-10
Jan-11
Apr-11
April-07
countries.
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Economic Survey 2010-11
118