ISLAMABAD: The apex chamber of the country has urged the government to focus on further accelerating exports and remittances with the trade deficit expanding by 14.70pc to $2.06 billion in November.
The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) said that imports that were previously on a declining path have now started picking up, indicating the growing economic activities but at the same time signalling the widening of the trade deficit too which is not good for the economy.
FPCCI President Mian Anjum Nisar stated that the economic managers were boasting of their performance on the plea of current account balance, which has witnessed a surplus for the fourth consecutive month in October, rising to $382 million.
The FPCCI president was talking to a trade and industry delegation, who met him here in his office on Saturday.
It is to be noted that back in Sept 2020 the current account had remained in surplus for the third month in a row at $73 million, making history with a 17-year high surplus in the July-Sept quarter compared to a deficit of $1,492 million of last year’s same time on the back of 29Ppc rise in exports and 9pc improvement in remittances.
“But it should be kept in mind that the surplus emerged on the back of a sustained increase in remittances and a smaller trade deficit, as since the start of this fiscal year in July, the cumulative current account surplus has reached $1.2 billion, reversing the $1.4bn deficit recorded in the same period last year.
He said that the country’s current account has been helped by a significant increase in remittances during the current fiscal year. So far, in the four-month period from July to October, total inflows of remittances have risen to $9.43 billion against $7.45 billion in the same period last year.
“To achieve consistency in current account surplus for a long period without compromising industrial growth the government will have to focus on increasing the exports and put the business and trade issues on priority, otherwise, the economic problems and balance of payment could further disturb with the growing trade deficit.
The FPCCI president said the government has already missed its annual export target for the first two years. “For the current fiscal year, the export target was reset at $27.7 billion, requiring at least 6pc growth,” he added.
He said that the current export portfolio is marred by a lack of diversification, as few products are exported by some exporters to limited markets. So, a major enhancement in exports requires huge and wide structural reforms.
Mian Anjum said that in 2019-20, the LSM output had fallen alarmingly by 10.17pc yearly. The industrial production after suffering months of damage inflicted by the corona pandemic is now clearly reflecting a revival in economic activities in the country. For the current fiscal year, the government had set the economic growth target at 2.1pc, which will be better in the current economic situation but is not enough to create jobs for a growing population.
He said that a quick turnaround can come from increasing competitiveness of the existing export base and demand-led production of agricultural products, especially high-value agriculture products.
The long-term strategy needs structural reforms of the entire export sector, including high tech and innovative products, value-added exports commodities and market diversification towards unexplored markets like South America and Africa.