THURSDAY, OCTOBER 04, 2001
Pakistan sees $1bn in export losses
KARACHI: Pakistan may lose more than $1 billion from cancelled export orders in the wake of last month's attacks on the United States, a senior official said on Wednesday.
The official from the state Export Promotion Bureau, who asked not to be identified, said a number of exporters had reported that orders were being cancelled or buyers asking for shipments to be put on hold until the "situation become clear".
"We have estimated that export orders of $1 billion to $1.5 billion to US and the EU are either cancelled or face the threat of cancellation," the official said.
Pakistan had set itself an export revenue target of $10.1 billion for 2001/02, slightly up from last year.
Exporters in the southern port city of Karachi said fears of US strikes on Afghanistan had dented Pakistan's image as some buyers felt orders may not be delivered on time if there was a war.
Meanwhile, the rupee -- which has lost more than 20 per cent of its value against the dollar in a little over a year -- has risen 2.8 per cent since September 11, making exports less competitive.
Political uncertainty over a possible backlash from radical Islamic groups in Pakistan was heightened by the government's swift support for the US in the wake of the attacks.
"The prevailing uncertainty is lethal...industry viewed that it would be more difficult to sell the "Made in Pakistan" logo," said Maqsood Ismail, a leading exporter in Karachi.
He said Pakistan, already badly affected by drought, slow growth last year and more than $80 billion in foreign and domestic debt, could face a further economic slowdown.
But Islamabad's support for Washington has brought some benefits. Last week Pakistan had $396 million in US debt rescheduled and some US sanctions lifted.
Manufacturers said production of leather goods, textiles and carpets had slumped more than 40 per cent as no fresh orders had been received from Europe and the United States for the autumn and winter seasons.
Pakistan's exports to the United States in fiscal 1999/2000 (July/June) reached $2.123 billion, with garments accounting for more than 42 per cent of the total.
Shipping companies last week began charging a war risk insurance surcharge of $100 per container or $5 per tonne on all cargo to and from Pakistan.
The chief economist at a foreign bank said the decline in
in Pakistani exports was in line with the fall in global consumer spending after September 11.
"Consumers are right now absent from the market and that is hurting Pakistani exports, especially textiles and leather," he said.
Pakistan's gross domestic product in fiscal 2000/01 was 2.6 per cent -- the lowest in 20 years -- compared with a targeted growth rate of 4.5 per cent and down from 6.1 per cent the previous year. ( REUTERS )
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