Pakistan Exports

May 20, 2024 (1mo ago)

Pakistan exports have not grown at the rate they should have over the last 20 years. But that does not mean they have not grown at all.

Back in 2004 the monthly export was about USD 1 Billion on average - now it is easily USD 3 Billion on average. That makes for a CAGR (or annualized growth rate ) of a shade above 4.5 %

Given that Pakistan's population grows by about 2 - 3% per annum, one could make an argument that this is in fact not so bad. And indeed, I would not characterize it hopeless.

But clearly it could - and should - have been more - a lot more

Looking at the graph above, the red trend-line shows the 12-month moving average - this makes it easier to look at the trend as the monthly data is skewed by seasonal trends and one-off events.

There are 3 distinct phases:

  1. From 2003/4 to 2008 the rate of growth is very good indeed - doubling exports in just 5 years.

  2. Things stall after that and we enter about 10 years of flat-lining. You get the occasional good few months as the monthly spikes show but the 12-month trend line makes it pretty evident that we were not going anywhere indeed. Remember that this was also the time of some of the heaviest power blackouts in the country - a situation which was not resolved until about 2018/19 after several new power plants were brought online.

  3. Finally, we see some energy post-covid starting in 2020 and peaking in about 2022. Pakistan’s proactive management of the covid era and its ability to hit the ground running when demand returned clearly had an impact. Since then it seems to be stalling again, but we’re still staying above 3 Billion a month. I would link this stalling to the sudden and exorbitant increases in the power tariffs - at least partially.

Now, depending on your point of view you can map political events on to this trends - something I’m purposely staying away from.

But it is clear that:

  1. Periods of stability and economic certainty coincide with growth in exports
  2. Reliable, well-priced electricity is vital regardless of any other factor
  3. There is no magic wand and no great invisible barrier. Given the right conditions, exports have grown in the past and can continue to grow.

Imagine if we were still doing USD 1 Billion per month instead of USD 3 Billion - we’d have gone bust by now.

In fits and starts we’ve managed to triple our exports in about 20 years. We could have quadrupled them by now, but all is not lost and we can still accelerate from here with stability, common sense policies and continuity of good governance.