Arithmetically IT Exports are in a Descent: Economist

Business Desk
ISLAMABAD: Faiz Ul Haq, a renowned trade economist, has warned that Pakistan’s IT exports are heading north after posting quarterly growth rates for five and a half years in a succession, i.e. first decline since third quarter of FY16.
For economies with similar twin deficits and similar import dependence as Pakistan, in terms of percentage of depreciation of their currencies, exports increase approximately 45 percent and trade deficit widens by another 48 percent in nominal terms, he added.
While rupee value was in a downward spiral, Pakistan’s IT exports did post significant growth in FY21 and FY22, i.e. 47 percent and 24.1 percent respectively – and, resulted in 87 percent cumulative growth in a couple of years. However, in the first quarter of FY23, Pakistan has posted a marginal growth in IT exports of only 3 percent. There is a lot to look into this abysmal performance, he added.
Retrospectively, it is also startling to observe that $633 million IT exports in Q1FY23 are even lower, when compared with the last three consecutive quarters – and, unfortunately, the indications are pointing towards the same trend to continue in Q2FY23 and it may even be a steeper contraction as rupee has recovered some lost ground after Ishaq Dar has taken over.
Faiz Ul Haq apprised that we are experiencing a reversal of the gained ground in the international markets; and, the government should collectively be on their toes to save the industry through radical policy interventions as 3 percent export growth is, in fact, a negative growth by all means.
Arithmetically speaking, on account of 30 percent rupee devaluation between June 30, 2022 to June 30, 2022 i.e. 157.54 to 204.85 rupees for a dollar; and, a negligible 3 percent YoY growth in Q1FY23, Pakistan has effectively experienced a negative growth of 10 percent in IT exports on YoY basis in the first quarter of FY23 – when adjusted for devaluation. This is a fiasco to say the least as there will be a massive brain drain and flight of capital from the IT industry, if it is not incentivized and not freed from the regulatory shackles. Growth momentum in IT exports is not tapering off, it is reversing, he added.