$350 million variation in SBP, FBS data

There is a huge contrast in the exports statistics reported by the State Bank of Pakistan and the Federal Bureau of Statistics. As per SBP data, exports of the country amounted to $1.9 billion in November 2011, whereas the FBS has estimated $1.55 billion exports last month that indicates a variation of about $350 million in just one month. As SBP maintains the balance of payment account, analysts give more importance to SBP’s statistics, says Muzzammil Aslam of JS Research. This variation in estimates of exports by SBP and FBS is available only for the month of November 2011.
According to FBS, in five months of FY12, exports showed 7.64 per cent growth in dollars and 9.02 per cent in rupees. From July-Nov FY12 the exports increased to $9.38 billion, from $8.72 billion in same period in FY11. Pakistan posted a current account deficit of $2.1 billion in 5MFY12 compared to $589 million in the corresponding period last year. The surge in current account deficit is due to a combination of slowdown in exports and surge in imports, driven by higher oil prices. In this financial year the imports growth is expected to recede due to decline in oil prices globally. This can be validated from Saudi Arabia’s plan to increase its oil output while shattered confidence in the western economies is expected to lead to slower global demand. Hence, demand for oil is likely to be on the lower side in the coming months. After a brief spell of a surplus of one year, Pakistan’s external account has reverted back to its usual deficit track. The deficit is mainly led by higher import bill, up by 20.5 per cent during 5MFY12. Already in 4MFY12, both petroleum products and crude oil registered a hefty growth of 46 per cent YoY and 76 per cent YoY, respectively. As a result, the share of oil imports rose to 41 per cent of the total import bill against 33 per cent in last year. The rise in oil imports is mainly driven by higher international oil prices which registered an average growth of 38 per cent YoY. Average oil prices in 4MFY12 were reported at $107 per bbl versus $77 per bbl in the corresponding period last year. Going forward, we expect import growth to recede due to decline in oil prices globally. Compared to the 5M average of $1,048 million, November witnessed a drop in remittances to $925 million. “We believe the slowdown in remittances could be attributed to the sharp rupee depreciation and the deepening political crisis,” Muzzammil added. Looking forward, analysts expect remittances to revert back on track once political uneasiness in the country calms down. Pakistan’s financial account surplus has rapidly been depleting and was reported at $169 million in 5MFY12 compared to $563 million last year. The decline is primarily attributed to slowdown in FDI to $408 million vs. $577 million reported last year. Also the global recessionary woes have reinforced foreigners to cut down their portfolio investments as $99 million worth of outflows were witnessed in 5MFY12 versus $173 million inflows last year. Due to sharp increase in trade deficit, slowdown in current transfers and financial flows, country’s balance of reserve witnessed a depletion of $1.70 billion. It may extend further as IMF payments are due from February 2012.