KARACHI: Pakistan’s information technology (IT) exports for January 2023 declined by 23 percent month-on-month (mom), the lowest since May 2022, data showed on Wednesday. What is the reduction due to differences between exchange rate markets?
IT exports for January 2023 stood at $190 million, with computer and telecom services down 20% and 35% MoM, respectively.
In computer services, exports of computer software and software consultancy declined by 25% and 15% MoM respectively.
The substantial decline in January reflects the 10-15% spread between the interbank and gray market rates for the US dollar for most of the month.
However, after the narrowing of the gap between market rates at the end of January 2023, IT exports moved ahead with the recovery from formal banking channels and are expected to recover.
Year-on-year (YoY), IT exports to January 2023 grew by 2% driven by 8% yoy growth in telecom services. Exports for January 2023 are the lowest since May 2022 which was $184 million. This amount is below the 6-month average of $221 million.
Broadly, a slowdown is seen after April 2022, with annual growth averaging 3 percent from May 2022 to January 2023, while the nine-month period August 2021-April 2022 averaged 32 percent annual growth.
The slowdown in IT exports mainly reflects a global slowdown in IT spending. In its latest report, Gartner, the technology research and consulting firm, has revised its growth forecast for IT spending to 2023 from 5.1 percent previously.
Pakistan’s IT Ministry has set an export target of $5 billion for FY23. The monthly average run rate of $218 million in the current financial year indicates that Pakistan will not be able to meet the export target by a large margin.
In 7MFY23, IT exports grew by 2% yoy to $1.52 billion. Computer services increased slightly to $1.22 billion due to a 3 percent year-over-year increase.
As a result of the decline in MOM in Jan-23, IT exports fell by 6.8%. This compares to 6.2% in Jan-22 and 8.1% in Dec-2022. In 7MFY23, total IT exports stood at 7.4%, as against 6.9% in 7MFY22.
A segment-wise breakdown for the month of January 2023 indicates that Telecom Services declined 35% MoM and grew 8% YoY to $29.7 million, and Computer Services declined 20% MoM. and rose slightly year-over-year to $159.9 million.
Total share of telecom/computer services exports for January 2023 stood at 16%/84%, respectively, compared to 15%/85% share in January 2022.
In 7MFY23, telecom/computers accounted for 19/81% of exports compared to 20/80% in 7MFY22, on the back of computer services exports which grew by 3% YoY in 7MFY23, software exports grew by 12%. and 6% in software consultancy.
Net IT exports (exports-imports) during 7MFY23 grew by 20% yoy to $1.34 billion as against 2% yoy growth in gross IT exports for the same period. Net IT exports on a TTM basis as of January 23 also rose 19% year-on-year to $2.2 billion. The Jan-23 monthly number rose 23% year-on-year to $178 million.
