Prime Minister Muhammad Shehbaz Sharif has rightly called upon the country’s exporters to adopt innovative and unique approaches to enhance exports, leading to valuable foreign exchange earnings for Pakistan.
Addressing a ceremony at the Textile Expo, the Prime Minister acknowledged the challenges faced by exporters but emphasized the presence of robust and forward-thinking entrepreneurs who have fostered Pakistan’s export culture over time.
He expressed confidence that with genuine government support and the exceptional intellect and hard work of entrepreneurs, the provision of high-quality export goods to foreign customers would be ensured.
The Prime Minister extended a warm welcome to the foreign delegates attending the event, noting that the participation of over 400 delegates from 60 countries highlighted Pakistan’s significance as an attractive destination for foreign guests, buyers, and traders.
It is a source of great comfort that Pakistan has fruitfully reached a staff-level agreement with the IMF on a stand-by arrangement worth $3 billion. This will help us forestall the predicted threat of default and a conceivably tragic economic situation.
Now we have some breathing space, therefore our policymakers must take all required steps to make sure an upsurge in exports. This is important because our trading partners’ central banks are presently tightening their monetary policies and raising interest rates to cool down their economies and fight inflation.
Latest statements from the United States Federal Reserve, the Bank of England, and the European Central Bank have stressed the necessity to continue raising the interest rates even if it means an incoming recession. The rise in yields in the US treasury market and UK gilts market indicates the challenging times that lie ahead.
However, what does this mean for Pakistani exporters when our key trading partners’ economies are heading toward a recession? The signs are already apparent in the facts, such as the contemporary rise in joblessness in Germany, which is Europe’s largest economy.
In view of the recent statement from the State Bank of Pakistan (SBP), we can expect inflationary pressures in the coming months, mainly in terms of wage inflation. This can have an unfavorable effect on exporters, adding to their costs.
Besides, historical data from 2013 to 2017 shows that the fixed exchange rate has not been favorable to our exporters’ effectiveness, as there is a vibrant connection between a strong currency and a reduced export quantum for Pakistan.
The approaching wave of inflation will make it even harder for small and medium-sized exporters who are already grappling with high electricity costs, to meet export targets and compete in the global market with the trading partners entering a recessionary phase.
Pakistani decision-makers must recognize that we operate in a global marketplace, and if the Western economies experience a recession, they adjust their strategies to support their exporters. Therefore, it is imperative for us to provide support to exporters in Pakistan during this challenging period. They can bring in valuable foreign exchange, and that will surely help lift Pakistan out of its debt crisis.
It seems that the world is ignoring potential risks. With geopolitical tensions mounting in the Russia-Ukraine conflict and the possibility of a miscalculation between China and Taiwan leading to a war, the dangers of a global trading disturbance could exceed even the Russia-Ukraine conflict.
Therefore, against such a scenario, it is crucial for Pakistani decision-makers to have a contingency plan in place to address the possible fall of our exports.
The government needs to prioritize and support the community of exporters as they play a vital role in generating valuable foreign exchange for the country. By providing the needed help, the community of exporters can sail across the current debt crisis and secure a thriving future for Pakistan.