Exports to Europe dip in FY24 despite GSP+

ISLAMABAD: In what appears to be a big concern for policymakers, Pakistan’s exports to European countries fell 3.12 per cent in FY24 despite its GSP+ status, which allows duty-free entry into most European markets.

In absolute terms, Pakistan’s exports to the EU dipped to $8.240bn in FY24 from $8.505bn in the preceding year, according to data compiled by the State Bank of Pakistan. The decline was mainly due to reduced demand for Pakistani goods in western, southern, and northern Europe.

In October 2023, the European Parliament unanimously voted to extend the GSP+ status for another four years until 2027 for developing countries, including Pakistan, to enjoy duty-free or minimum duty on European exports.

In FY23, exports to the EU dropped 4.41pc to $8.188bn from $8.566bn in the preceding fiscal year. This shows that exports under the scheme to European countries remained static for the past two years.

Demand for Pakistani goods is falling

Western Europe, which includes countries such as Germany, the Netherlands, France, Italy, and Belgium, accounts for the largest portion of Pakistan’s exports to the EU.

However, exports to this region have significantly decreased by 8.33pc. The export value stood at $3.983bn in FY24, down from $4.345bn during the same period last year.

While exports to Western Europe declined and recorded a paltry growth to Southern and Northern Europe, there is a silver lining in the form of an uptick in exports to Eastern Europe. The exports saw an increase of pc to $629.762m in FY24, up from $560.09m in the corresponding months last year.

Exports to southern Europe saw a paltry growth of 0.40pc to $2.992bn in FY24 from $2.980bn in the corresponding period last year. In this region, exports to Spain grew 4.87pc to $1.333bn in 11MFY24 from $1.271bn in the preceding year.

Exports to Italy declined 2.60pc to $1.121bn in FY24, compared to $1.151bn in the same period last year. Pakistan’s exports to Spain increased 5.38pc to $1.449bn in FY24 from $1.375bn over the previous year. Exports to Greece also recorded a marginal increase in growth, but the volume was slightly over $129.88m during the year under review.

However, exports to northern Europe witnessed a meagre growth of 2.54pc. The export value to this region stood at $635.732m, up from $619.932m in the corresponding period last year.

Pakistan’s exports to the UK slightly increased to $2.012bn in FY24 from $1.968bn over the corresponding period last year, indicating an increase of 2.23pc.

In FY23, Pakistan’s exports to the UK dipped by 10.63pc to $1.966bn from $2.20bn in the same period of the preceding year.

The British government, however, has assured Islamabad that the post-Brexit scenario will not change, as evident from Pakistan’s inclusion in its preferential market access scheme.

Pakistan’s exports to Western Europe fell 8.33pc to $3.983bn in FY24 from $4.345bn last year.

Exports to Germany fell 5.5pc to $1.512bn in FY24 from $1.600bn in FY24. Similarly, exports to the Netherlands, the second biggest market for Pakistani goods, dipped 4.29pc to $1.383bn in FY24 from $1.445bn over the corresponding period of last year.

Exports to France fell 10.94pc to $507.739m in FY24 from $570.094m in the preceding year, while exports to Belgium dipped 20.66pc to $556.163m against $701.013m over the same period last year.

Published in Dawn, July 28th, 2024