Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Thursday warned the government that latest current account surplus is reflecting massive economic contraction.
Pakistan recently achieved a current account surplus in March 2023, a feat that many may consider a cause for celebration. However, according to Irfan Iqbal Sheikh, President of the FPCCI, this surplus actually reflects a massive economic contraction unlike any other.
READ MORE: Foreign exchange mismanagement leads to airline shutdowns in Pakistan
Sheikh explained that the declining imports in Pakistan mean fewer industrial exports in the months to come and even lesser capacity to make timely repayments on external loans. Based on the latest trade statistics for the first nine months of the outgoing fiscal year, Sheikh highlighted that textile exports have shrunk by 12.4 percent to $12.48 billion, and the IT & ITeS industry’s export remittances have also declined by 0.5 percent to $1.94 billion, in contrast to the 47 percent average growth recorded for two consecutive years in FY21 and FY22.
The total exports in Q1 – Q3 FY23 stood at $21.046 billion, down from $23.35 billion in the same period last year, reflecting a 10 percent decline. Sheikh argued that it is difficult to understand why the government’s economic team is celebrating this current account surplus achieved through contractionary, regressive, and recessionary measures.
READ MORE: Pakistan’s economy faces potential negative growth in FY23, warns FPCCI
The decline in export proceeds for the third quarter of FY23 is particularly alarming, as it suggests even worse export performance in the fourth quarter, i.e. April 2023 – June 2023. This is due to the sharp decline of 22.6 percent in textile exports in March 2023, the mainstay of Pakistani exports. Sheikh warned that Pakistan may be heading towards an uncharted territory of unprecedented economic contraction, even in comparison to the country’s rather battered economic history.
To avert the total crumbling down of the country’s social, economic, and political fabric, Sheikh emphasized the need to protect trade and industry to keep revenues, exports, and employment afloat. The FPCCI has offered its unconditional support to the government of Pakistan in this regard. However, Sheikh stressed that the dialogue on the national economic agenda and plan for the next 15 years must be conducted through an effective, inclusive, and egalitarian consultative process with the business community.
READ MORE: Cross-stuffing of Afghan, Uzbek cargo at Karachi Port hailed by Pak-Afghan Chamber
To kick-start this consultative process, Sheikh has proposed a four-legged approach, including (i) formulating a mechanism to protect exports swiftly, (ii) charting out a post-IMF Deal plan for stabilizing the economy with stipulated measures, (iii) discussing the broadening of the tax-base supplemented with simplification of the taxation system, and (iv) discussing sector-wise budgetary proposals for FY24.
OICCI expresses concerns over threats to business continuity in Pakistan’s economy
In conclusion, while the current account surplus may seem like a positive achievement for Pakistan, it masks deeper issues of economic contraction and decline in exports. Sheikh’s proposals for a consultative process involving the business community are crucial for developing a comprehensive economic plan that can address these challenges and put Pakistan on a path towards sustainable growth and development.
