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Pakistan government is working to increase textile exports to support the weakened economy

Thu, Aug 13 2009, 02:43 GMT
by ecPulse.com analysis team

ecPulse.com

Pakistan government has been trying to revive exports, especially shipments of textile as it deteriorated recently due to the sharp decline in world demand having in mind that shipments of textile account for half of total exports and is a pillar for economic growth.

Pakistan government is having the target of enhancing textile exports that represent nearly have of total shipments to $25 billion by 2014. Mrs. Rana Farooq Saeed the Textile Minister said that the government is working on improving the infrastructure, besides technology upgrades and skill development to improve the nation's textile industry.

However, the government will provide 27 billion rupees ($326 million) to improve the industrial sector especially textile industry as the government depends on exports of textile to realize recovery after the credit crisis hit the economy leading to severe deteriorations in economic conditions.

Pakistan exports dropped 6.7% to record $17.8 billion during last year, while textile shipments fell to $9.78 billion during the fiscal year ended June 30 compared with $10.8 billion in a year earlier. Exports weakened due to declining demand, in addition to power shortages and weak business confidence. Also, disorder in the northwest of the country where Taliban continues to attack Military forces, affected the economy badly.

Improving exports would be the key solution for the Pakistan economy to get out of recession the worst since WWII, having in mind that factories are suffering from shortage in electricity and increasing fuel prices that companies can't afford.

Nevertheless, consumer prices inclined by 11.17% during July from a year earlier which is the slowest pace in 19 months, while industrial output slipped 8.5% in the 11 months ended May 30. Pakistan had to ask for a bailout from the International Monetary Fund to avoid delaying debts repayment as the foreign exchange reserves dropped 75%in one year to be $3.5 billion.

Pakistan's Central Bank lowered interest rates by 1% in April to reach 14% and it is expected that the central bank will show more cuts in the benchmark between 1% and 2% as inflation eased and lower borrowing costs will support the economy.

Finally, Pakistan's economy is facing a lot of economic challenges besides disorder in the northwest that is making it harder for the government and policy makers to achieve recovery. The government expected that the economy will grow by 3.3% this year from a previous 2.0% last year, while HSBC Holdings Plc predicted that it will expand by 0.8% only.

Published on  Thu, Aug 13 2009, 04:31 GMT