TRADE AND PAYMENTS

-HUSSAIN AFTAB CHANGI with

-FARHAN JAMIL -SAAD SHAHEEN -NOMAN KADIR -FAHAD ULLAH

PREAMBLE
World output which grew by 5.3% in 2010 decelerated in 3.9% in 2011 Word Trade: 13% in 2010 growth dropped to 5.8% in 2011 Prices of non-fuel commodities deceleration: 26.3% in 2010 To 17.8% 2011 To negative 10.3% [projected for 2012] European Sovereign Debt Crisis, turmoil in Arab countries & natural calamity in Thailand caused disruption in supply chain.

Projection for 2012

It will decelerated more due to Risk disadvantage of European Sovereign Debt Crisis Worsening financial stress Increase in oil prices Geo political risks

Current a/c Balance = Trade Balance + Service Balance + Income a/c Balance + Current Transfers Net

CURRENT ACCOUNT BALANCE

Current account deficit stood $ 3,394 million during July-April 2011-12. This deficit in the current account was largely caused by the widening of trade and services account deficit. The trade deficit expanded mainly due to the 14.5% growth in imports and the 0.1% increase in exports; thereby widening the trade deficit by 49.2% during the period The major factor behind the widening of the trade deficit was the sharp rise in the import bill during July-April 2011-12 which increased due to the higher international prices of crude oil

Upshots July-April 2011-12

Current account balance remained under pressure during the months of September 2011, October 2011 and November 2011 A surplus of $142 million in March 2012. The monthly average exports increased by 0.1% during July-April 2011-12 and stood at $2,047 million per month Services account deficit of $1,122 million. Due to fall 16.6% fall in service exports Within services export, government services witnessed a major decline of 34.4%. This was the outcome of the absence of logistic support inflows. The other major categories of services export which showed a fall during July-April 2011-12 remained transportation by $ 51.0 million Other business services by $ 68.0 million Communication services $ 21.0 million. On the other hand, the major service exports of insurance, computer and information and travel witnessed a major increase during July-April 2011-12 Workers remittances grew by 20.2 percent and stood at $ 10.9 billion.

Workers Remittances
-FARHAN JAMIL

 According to World Bank estimates the remittances flows to developing countries in 2011 increased by 8.0 % from $ 325 billion in 2010 and is forecast to grow at 7 to 8 % annually till 2014. Pakistan witnessed a strong growth of 25.8 % in 2011 over previous year Compared to the 10.1 percent growth in South Asia. Pakistan has become the fifth largest remittances recipient developing country in 2011.

Year wise Change in Remittances

Top Countries of Source for Remittances

 Diverting remittances from the informal to the formal channel.

Workers remittances coming through the banking channel has increased considerably, from 75 percent in 2009-10 to 91 percent in 2011-12.

Pakistan Remittances Initiative (PRI): Preparation of national strategies on remittances. Taking all necessary steps to implement the overall strategy. Playing the advisory role for financial sector. Becoming a national focal point for overseas Pakistanis.

Financial Accounts
-SAAD SHAHEEN

FINANCIAL ACCOUNT
FINANCIAL ACCOUNT POSTED A SURPLUS OF $1200 MILLION DURNG JULY-APRIL 2011-12 AGAINST SURPLUS OF $690 MILLION IN CORRESPONDING LAST YEAR. FDI DECLINED BY $625 MILLION AND PORTFOLIO INVESTMENT DECLINED BY $126 MILLION. OTHER INVESTMENT STOOD AT $721 MILLION FDI DECLINED BY 48.3%. REASONS: 1. LOWER INVESTMENT IN TELECOMMUNICATION 2. FINANCIAL BUSINESS. 3. POWER SECTOR MAIN REASON ENERGY CRISIS

Exports
-NOMAN KADIR

Important Points
Jewelry , chemicals & pharmaceutical product, surgical goods & medical goods, Sports goods and engineering goods are the positive contributors in the overall increase of other manufacturing group The increase in other manufacture group was offset by negative growth of carpet, leather garments and cutlery The export of carpet declined because of increase competition from neighboring countries The major factor behind the overall decline of Food items are because of rice, wheat and vegetables Rice export declined because of higher availability of rice internationally and higher portion of non basmati rice Wheat export declined because of lower demand internationally The negative growth in the textile sector is because of energy crises and fall of international demand

Major exports
The major contributor of export Pakistan are rice, leather and cotton manufactures The share of other exports increased from 28.5% to 39.0% with shows 10.5% increase as compared to 2006-2007 data

Major export markets

in 2005-06 exported was mainly concentrated in these five countries (USA, UK, Germany, Hong Kong and U.A.E) In 2005-06 the share was 47.2% The share of these countries declined and currently it is 35.2% The share of other market increased from 52.8% to 64.8% Increased export to China, Afghanistan and Bangladesh

Imports
-FAHAD ULLAH

Key Points & Charts

The import of petroleum products showed a growth of 43.5% compared to 8.4% last year 76.4% of this increase is caused by international oil prices and 23.6% increase is caused by the quantity demanded increased

 The increase in petroleum products bill is also evident from the international monthly average prices of oil. From $76.4 in July 2010 to $120.5 in April 2012

 The chart shows a prominent increase in the import of fertilizers due to decline in local production owing to gas shortages 87.6% due to increase in quantity and 12.4% due to increase in prices

Group Food

Overall Effect Decrease

Cause Better products locally available Increase in int. prices and increase in demand Decrease in duties, and tax cuts Availability of cheaper mobiles and increase in demand Decline in demand and export prices, and energy crisis Low local production due to gas shortage

Petroleum

Increase

Consumer Durables

Increase

Telecom

Increase

Machinery

Decrease

Raw Material

Increase

Directions of Imports

Measures Taken by Gov. Regarding Imports/Exports

Over & Out!