In November 2024, Pakistan export of services reached $675.69 million, marking a growth of 6.51% compared to the same month in the previous year. The services export sector has shown consistent growth since February 2024, with the exception of August when there was a 6.5% contraction. This growth is mainly driven by an increase in information technology (IT) exports.
Growth in Service Exports
When comparing the export data in Pakistani Rupees (PKR), service exports grew by 3.63%, reaching Rs 187.713 billion in November 2024, compared to Rs 181.131 billion in the same month of the previous year. This indicates positive growth, even when adjusting for the exchange rate.
Performance Over the Past Five Months
In the first five months of the fiscal year 2024-2025 (FY25), the export of services rose by 7.58% to a total of $3.27 billion, up from $3.04 billion in the same period of FY24. This shows a consistent increase in exports for the first five months.
Annual Service Export Performance
In FY24, Pakistan’s total service exports grew by 2.77%, reaching $7.8 billion compared to $7.59 billion in FY23. Although the growth is modest, it reflects a steady improvement in the sector.
Role of the IT Sector
The IT sector has played a significant role in this growth. Pakistan was the second-largest country in the world for freelancers last year. IT services and products were exported to 170 countries, showing the global reach of Pakistan IT industry.
Support for Freelancers and IT Exports
To further support IT exports and freelancers, the government introduced a new framework that makes it easier for freelancers to open bank accounts and allows them to retain more foreign currency in their accounts. The government is targeting $15 billion in IT exports over the next five years.
Changes in Foreign Currency Rules
The State Bank of Pakistan increased the allowable retention limit for Exporters’ Specialized Foreign Currency Accounts from 35% to 50%. This has encouraged IT exporters to bring their profits back to Pakistan, further boosting the export figures.
Impact of Exchange Rate Stability
The stability of the Pakistani Rupee has helped IT companies repatriate their earnings, as it has provided a more predictable environment for business activities.
Service Imports and Trade Deficit
While exports grew, imports of services also increased by 4.60% in November 2024, reaching $828.56 million, compared to the previous year. Over the period from July to November 2024, the total service imports increased by 2.88% to $4.43 billion.
Trade Deficit in Services
Despite an increase in imports, the trade deficit in services narrowed by 8.48% from July to November 2024, dropping from $1.25 billion to $1.15 billion. However, the trade deficit in services for November increased by 3.10%, rising to $152.87 million from $157.76 million in November 2023.
Summary of Key Data
Here’s a summary of the key export and import data for November 2024:
| Metric | November 2024 | November 2023 | Change |
|---|---|---|---|
| Export of Services | $675.69 million | $634.39 million | +6.51% |
| Export in Rupees | Rs 187.713 billion | Rs 181.131 billion | +3.63% |
| Five-Month Exports | $3.27 billion | $3.04 billion | +7.58% |
| FY24 Total Exports | $7.8 billion | $7.59 billion | +2.77% |
| Service Imports | $828.56 million | N/A | +4.60% |
| Trade Deficit (Nov) | $152.87 million | $157.76 million | +3.10% |
| Trade Deficit (July-Nov FY25) | $1.15 billion | $1.25 billion | -8.48% |
Summary
The growth in the export of services, particularly driven by the IT sector, is a positive sign for Pakistan’s economy. Although service imports have also risen, the overall trade deficit in services has narrowed, which shows that Pakistan is making progress in balancing its trade in services. With continued government support for freelancers and IT exporters, the future of Pakistan’s service export sector looks promising.
