The downturn in the current account deficit continues and it has dropped by 71.04 percent during the past eight months’ to $2.843 against the deficit of $ 9.817 billion in merchandise account in the corresponding period last year. Against the steep fall in imports, growth in exports has remained sluggish. During July-February goods worth $ 15.643 billion were exported as compared with the $15.097 billion during the same period last year. In percentage term exports grew by 3.62 percent. However, exports will remain stagnant during the remaining four months of the current fiscal year because of slow down of global economy in the aftermath of coronavirus spread to 157 countries.
Foreign trade policy of imports compression has hit more the imports of industrial raw material and intermediate goods consumed by industries catering for demands both domestic and foreign markets. The policy has hit hard the manufacturing sector more than the agriculture sector. In the budget strategy paper approved by the cabinet, gross domestic product growth rate has been downwardly revised from 3.3 percent to 2.6 percent. The negative growth in manufacturing and agriculture will push up the unemployment rate to 6 percent. Textiles, automobile were already bearing the brunt of restrictive import policy and now pharmaceutical firms may face shortage of raw material due to decline in its import.
The pharmaceutical industry is entirely dependent on imported raw material from India, China, South Korea and Taiwan as successive governments did not bother to formulate an industrial policy of facilitating setting up industries of raw material production and imports substitutions. Even the multinational pharmaceutical companies were not asked to set up raw material producing plants as was done in India by these companies. Now smooth supply of raw material for pharmaceuticals has become uncertain due to industrial lockdown in several countries. National and local pharmaceutical firms used to import relatively cheaper raw material from India but that source got choked after the suspension of trade relations between India and Pakistan last year. These firms then started imports of Indian raw material from third country at relatively higher price to keep the industry running. But government of India has imposed total ban on the export of raw material for pharmaceutical products to avoid shortage within in the country.
According to Pakistan Bureau of Statics Pakistan imported raw material for pharmaceutical industry worth $677 million during the past 8 months of the current fiscal year against the imports of $743 million during the same period last year. Pharmaceutical industry fears that shortage of raw material will impact the manufacturing of different brands of life saving medicines including the ones in dire need for treatment of coronavirus infections. Speaking at Karachi Press Club, Pakistan Pharmaceutical Association (PPMA) Senior Vice Chairman, Farooq Bukhari told that country’s Pharmaceutical Industry will stand shoulder to shoulder with the government in combating coronavirus outbreak, if authorities extend cooperation in running the industry efficiently. Both local and multinational pharmaceutical companies need fiscal incentives to enable them import raw material at lower cost. Currently, 770 pharmaceutical units are operational across the country, which generates big demand for raw material. Let us hope that under preparation long term industrial policy will be out without further delay and it will also include a component of setting up industries of raw material for the manufacturing sector.
