Economy
Pakistan’s trading partners
There have been questions raised on the extent to which foreign policy of Pakistan should reflect its trading relationships with individual countries, regions, and groups of countries which are members of international organizations? This requires determination of which are the major destinations of the country’s exports, and which are the major origins of our imports? What is the regional and country-wise pattern of our trade surpluses and deficits? And which are the major countries to which our exports have shown faster growth?
The analysis has been undertaken with trade data made available by the SBP in its economic data website. For earlier years, the relevant information has been obtained from the SBP publication, Handbook of Statistics on Pakistan Economy.
The top four export markets of Pakistan in 2020-21 are the EU countries combined, the USA, UK, and China. It is significant that the major destinations of Pakistan’s exports are mostly in Europe and North America. Pakistan has been granted GSP plus status by the European Union with some preferential tariff treatment. Pakistan also has a free trade agreement with China which has been implemented in steps from 2006 onwards.
The combined exports to the 27 EU countries aggregated to $6.4 billion in 2020-21. This represents a share of 25 percent of Pakistan’s total exports. The second largest value of exports is to the USA of $5.0 billion, equivalent to 20 percent of total exports of Pakistan.
The other two relatively large destinations of the country’s exports are the UK and China. Combined, the share of Pakistan’s four major export markets is over 62 percent of total global exports. This highlights the extreme regional concentration of the country’s exports. The share of SAARC countries is only 8 percent, despite presence of the SAFTA free trade agreement. It was somewhat higher when there was trade directly with India.
Turning to the regional distribution of the country’s imports, the sources are more diversified. China is by far the dominant exporter to Pakistan. Imports from China aggregated to $13.2 billion in 2020-21, equivalent to over 25 percent of total imports. The other major exporting countries to Pakistan include the OPEC countries with a share of 24 percent, followed by the EU countries and the USA. Overall, the combined share of these countries is close to 55 percent in total imports of Pakistan.
What has been the growth rate of exports to the major destinations? Between 2012-13 and 2018-19, the fastest cumulative increase over the six years is to the UK of 33 percent, followed by a 32 percent increase to Germany and of 11 percent to the USA. The big declines are to China of 27 percent, to Afghanistan of 37 percent and to the UAE of as much as 57 percent.
By far the largest increase in imports has been from China, which has taken full advantage of the free trade agreement with Pakistan. Between 2012-13 and 2018-19, the cumulative increase has been as much as 133 percent. Now China alone accounts for 30 percent of total imports of Pakistan.
The overall trade deficit of Pakistan was very large in 2020-21 at $26.5 billion, with imports over twice the level of exports. Therefore, the likelihood is high that Pakistan will carry a significant deficit with most of its major trading partners. The country-wise balance of trade is given in the table below.
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Table 1
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Pakistan's Trade Balance with Major Trading Partners, 2020-21
($ billion)
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Exports to Imports from Balance of Trade
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China 2.0 13.2 -11.2
USA 5.0 2.4 3.6
EU Countries 6.5 3.7 2.8
Major OPEC Countries 1.9 9.4 -7.5
Others 10.2 28.7 -18.5
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Total 25.6 52.1 -26.5
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Pakistan has a very large trade deficit with China, equivalent to 42 percent of its global deficit. The deficit has been growing rapidly. Pakistan’s exports to China have been declining while imports have shown fast growth. Today, China’s exports to Pakistan are six times its imports from Pakistan. The time has come for a review of the implementation of the 2006 Trade Agreement between Pakistan and China. Pakistan needs to seek more quid pro quo from China.
The trade surplus with two major trading partners – the USA and the EU countries – is of $3.6 billion and $2.8 billion, respectively. These are the bigger markets, especially for textile products. The trading relationship with these countries needs to be preserved and built upon.
Pakistan has preferential access to the EU market through the GSP plus programme since 2014. This allows a large share of Pakistan’s exports to enter EU countries free of duty. Two criteria must be met for continuation of this facility. First, GSP-covered imports should be less than 2 percent of EU’s imports from all GSP beneficiaries. The share currently of Pakistan is 1.6 percent. Second, the seven largest GSP covered products must account for at least 75 percent of Pakistan’s total GSP covered exports to the EU. The share currently of these products is 94 percent.
Further, Pakistan has had to ratify 27 core international conventions and subscribe to binding commitments to implement them effectively. These are mainly UN and ILO conventions and other conventions on environment. The GSP status of Pakistan is periodically reviewed by the EU. Weak areas of implementation by Pakistan relate to gender inequality, workers’ rights, and the presence of child workers.
There has been some focus recently on Pakistan’s trading relationship with Russia. The current volume of trade between the two countries is small with $163 million of exports and $593 million of imports. The imports are largely of wheat. Now with the international trade sanctions on Russia following the invasion of Ukraine, new sources of wheat will have to be found when the quantity required could rise to almost 5 million tons given the failure of the current wheat crop.
Via BR
China
Decoding China’s Consumer Price Rebound Amid Deflation Risks: Insights & Analysis
Introduction
China’s consumer prices have shown signs of rebounding, thanks to a holiday boom. The Consumer Price Index (CPI) grew by 0.7% year on year in February, surpassing expectations and marking the first rise after six consecutive months of decline. However, amidst this positive development, there are looming concerns about deflation risks as factory gate prices continue to fall for the 17th consecutive month. This article delves into the intricacies of China’s current economic landscape, analyzing the factors contributing to the CPI growth and exploring the implications of persistent deflation risks.
1: Understanding China’s Consumer Price Index (CPI) Growth
The Consumer Price Index (CPI) serves as a key indicator of inflation and reflects changes in the prices paid by consumers for goods and services. The recent 0.7% year-on-year growth in China’s CPI in February has sparked optimism among economists and policymakers. This growth can be attributed to various factors, including increased consumer spending during holidays, rising demand for certain goods and services, and government stimulus measures aimed at boosting consumption.
2: Implications of CPI Growth on China’s Economy
The rebound in consumer prices has significant implications for China’s economy. A positive CPI growth indicates a healthier level of inflation, which can stimulate economic activity by encouraging spending and investment. It also reflects improved consumer confidence and overall economic stability. However, it is essential to monitor the sustainability of this growth and its impact on other economic indicators.
3: Analyzing Deflation Risks in China’s Economy
Despite the encouraging CPI growth, there are concerns about deflation risks looming over China’s economy. The continuous decline in factory gate prices for the 17th consecutive month is seen as a warning signal by analysts. Deflation can have detrimental effects on an economy, leading to reduced consumer spending, lower corporate profits, and potential economic stagnation. Policymakers must address these deflation risks proactively to prevent long-term negative consequences.
4: Factors Contributing to Deflation Risks
Several factors contribute to the deflation risks faced by China’s economy. Overcapacity in certain industries, weak global demand, trade tensions, and technological advancements leading to cost reductions are some of the key factors driving down factory gate prices. Addressing these underlying issues requires a comprehensive approach that involves structural reforms, targeted stimulus measures, and strategic policy interventions.
5: Strategies to Mitigate Deflation Risks
To mitigate deflation risks and sustain economic growth, policymakers in China need to implement effective strategies. These may include promoting domestic consumption through incentives and subsidies, fostering innovation and technological advancement to enhance competitiveness, addressing overcapacity through industry restructuring, and maintaining a stable macroeconomic environment through prudent monetary and fiscal policies.
Conclusion
China’s consumer price rebound offers a glimmer of hope amidst challenging economic conditions. While the CPI growth signals positive momentum in the short term, it is essential to address the underlying deflation risks to ensure long-term economic stability and growth. By understanding the factors contributing to CPI growth and deflation risks, policymakers can formulate targeted strategies to navigate these challenges effectively. Monitoring economic indicators closely and implementing proactive measures will be crucial in safeguarding China’s economy against potential downturns.
Economy
Unveiling the Potential: Lake Street Analyst Raises Price Target on Crexendo to $7
Introduction
In the dynamic world of stock markets, analysts play a crucial role in guiding investors with their insights and recommendations. Recently, Lake Street analyst Eric Martinuzzi made waves by raising the price target on Crexendo (NASDAQ: CXDO) to $7 from $5.50, reaffirming a Buy rating and showcasing his bullish outlook on the company’s prospects. This move not only reflects Martinuzzi’s confidence in Crexendo but also sheds light on the underlying factors driving this optimistic stance.
1: The Analyst’s Perspective
Eric Martinuzzi, a seasoned analyst at Lake Street, has demonstrated his faith in Crexendo’s growth potential by revising the price target upwards. His Buy rating underscores a positive outlook on the company’s trajectory, indicating a belief in its ability to thrive in the competitive market landscape. By delving into Martinuzzi’s rationale behind this decision, investors can gain valuable insights into what sets Crexendo apart and why it is poised for success.
2: Unpacking Crexendo’s Market Position
Crexendo, a technology company specializing in cloud communications solutions, has been making strides in expanding its market presence and enhancing its offerings. With a focus on innovation and customer-centric solutions, Crexendo has positioned itself as a key player in the industry. The heightened price target from Lake Street signals a strong conviction in Crexendo’s capabilities to further solidify its market position and drive growth.
3: Factors Driving Optimism
Several factors contribute to the positive sentiment surrounding Crexendo and justify the increased price target set by Lake Street analyst Eric Martinuzzi. These may include strong financial performance, innovative product offerings, strategic partnerships, market trends favoring cloud communications solutions, and overall industry outlook. By examining these factors in detail, investors can better understand why Crexendo is garnering attention and what potential opportunities lie ahead.
4: Implications for Investors
For investors looking to capitalize on the bullish outlook for Crexendo, understanding the implications of the revised price target is crucial. It signifies not just a numerical increase but also a vote of confidence in the company’s ability to deliver value and generate returns for shareholders. By aligning investment strategies with this optimistic outlook, investors can position themselves strategically to benefit from Crexendo’s growth trajectory.
Conclusion
In conclusion, Lake Street analyst Eric Martinuzzi’s decision to raise the price target on Crexendo to $7 reflects a positive assessment of the company’s prospects and underscores its growth potential. By exploring the analyst’s perspective, unpacking Crexendo’s market position, analyzing the factors driving optimism, and considering the implications for investors, stakeholders can gain valuable insights into why Crexendo is an intriguing investment opportunity worth considering.
Economy
The Economic Consequences of Elections: A Perspective from Nedbank
Introduction
Elections are an integral part of any democratic society, providing citizens with the opportunity to choose their leaders and hold them accountable for their actions. However, the focus on elections can often divert attention from other pressing issues, such as fixing the economy.
In a recent statement, the Nedbank chief, Mike Brown, expressed concern that the upcoming elections could take the focus off fixing the economy, which is a cause for concern for many South Africans. In this article, we will delve deeper into the economic consequences of elections and the implications for South Africa.
The Economic Consequences of Elections
Elections can have significant economic consequences, both in the short and long term. In the short term, elections can lead to increased uncertainty, as investors and businesses may hold back on making decisions until the outcome is clear. This uncertainty can lead to a decrease in investment, which can negatively impact economic growth.
In the long term, elections can lead to policy changes that can have significant economic consequences. For example, if a new government comes into power with a different economic policy, this can lead to changes in regulations, taxes, and other economic factors that can impact businesses and investors. This can lead to a decrease in confidence in the economy, which can further impact investment and economic growth.
Nedbank’s Perspective
Nedbank, one of South Africa’s largest banks, has expressed concern that the upcoming elections could take the focus off fixing the economy. Mike Brown, the Nedbank chief, has stated that “the focus on the election could distract from the need to address the structural issues that are holding back the economy.” This is a concern shared by many South Africans, who are worried about the country’s economic future.
Structural Issues in the South African Economy
South Africa’s economy has been struggling for some time, with high levels of unemployment, low economic growth, and a large budget deficit. These structural issues are complex and require significant attention and effort to address. However, the focus on elections can divert attention from these issues, making it difficult to make progress in fixing the economy.
Conclusion
Elections are an important part of any democratic society, but they can also have significant economic consequences. The focus on elections can divert attention from other pressing issues, such as fixing the economy. As the Nedbank chief has pointed out, this can seriously affect South Africa’s economic future. Attention must be given to these structural issues, regardless of the outcome of the elections. Only then can South Africa hope to achieve sustainable economic growth and development.
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