Machinery imports on a declining trend during July – Feb, 2018

Ever since the approval of China Pakistan Economic Corridor (CPEC), Pakistan has seen a surge in machinery imports (Power Generation, Electrical Machinery, and Construction & Mining). CPEC investments are mainly concentrated in Power Generation and Infrastructure Projects.

China’s investments in Pakistan have already started becoming a huge burden for the economy visible in $14 billion trade deficit with China, $ 3 billion repayments every year to begin from 2020 for thirty years. Pakistan has been cornered into a tight spot despite numerous efforts by the government to prop up exports and curb unnecessary imports into the country.

Despite these heavy loans and imports, Pakistan’s power woes have not have been resolved even though a plethora of projects have already been launched and completed throughout the country under the flagship of CPEC.

On the other hand, Pakistan’s infrastructure capabilities have been visibly enhanced. A wide network of roads, highways, motorways, expressways and carriageways are already functional and the remaining ones are expected to be completed by the end of year 2019. This would help the connectivity and mobility within the country by leaps and bounds.

Machinery Group imports during July – Feb, 2018

Pakistan Machinery imports during the first eight months of fiscal year 2018 fell by 3.23 percent to clock in at $ 7.559 billion against $ 7.811 billion same period last year. The machinery group imports have declined due to a visible drop in imports of subsets such as Power Generation and Construction & Mining Machinery.

*Machinery Group Imports, SBP, MG Link

The imports in the machinery group continue to decline, month on month machinery imports during February also went down by 23.46 percent reaching $ 889.262 million down from $ 1.161 billion in January 2018.

The decline in imports can be attributed mainly due to a drop in Power Generation imports; dipping by 18.71 percent during the first eight months of fiscal year 2018 (July – Feb) reaching $ 1.776 billion from $ 2.185 billion during the same period last year.

Furthermore, Construction & Mining Machinery (CMM) imports also went down by 29.14 percent during the cumulative period. The total CMM import bill reached $ 237.211 million against $ 334.761 billion last year. Electrical Machinery & Apparatus imports also fell by a meagre -0.05 percent during the eight months clocking in at $ 1.429 billion.

*Power Generation Machinery Group Imports, SBP, MG Link

On the flipside, Textile Machinery imports were up during the period under review. Pakistan’s Textile sector imported machinery worth $ 381.380 million up by 10.73 percent from $ 318.903 million last year.

Imports in subsets of Telecom +14.51 percent and Agricultural Machinery +12.60 percent went up respectively with a cumulative bill of $ 1.089 billion during the first eight months of FY18.

Projects under CPEC are expected to be completed by the year 2022, these projects are expected to increase the imports bill further in the coming two to three years for Pakistan as tech related imports for installation of optical fibers network, other machinery imports for the upgradation of transmission network, development of railway lines and networks including ML – 1 and to complete the ongoing infrastructure and energy projects will take their toll on the economy.

Pakistan at the current moment is in a dire need of effective policies to manage and increase exports, decrease imports by curtailing unnecessary expenditures and increasing revenue in order to repay the loans to China.

Posted on: 2018-04-05T11:30:00+05:00