Pakistan IT exports in Oct-22 up by 13% YoY

Information Technology (IT) exports of Pakistan for October 2022 increased by 13% YoY to US$221mn due to an increase of 38%/8% YoY in Telecom/Computer services.

Export number also recovered by 7% MoM from September 2022 mainly due to a 42% MoM increase in Telecom Services. Latest export number is also above the 6-month rolling average of US$212mn. Exports are however down 15% from its peak of US$260mn in March 2022. 

In 4MFY23, exports are up by 3% YoY to US$854mn. IT Ministry of Pakistan has set a target of US$3bn exports for FY23. Current fiscal year run rate of US$214mn monthly average and 6-month rolling average of US$212mn have raised concerns whether Pakistan will be able to achieve this target.

IT sector exports have depicted a 5-year CAGR of 23% (FY18-FY22) and a 10-year (FY13-FY22) CAGR of 19%. Therefore, the current growth trajectory is below the historical trend.

However, according to IT industry experts, the sector is still growing near the levels of its 5-year CAGR but the growth is not being reflected in the headline number due to volatility of PKR compared to the US$ and companies not bringing complete dollar flows in the country. Hence, currency stability going ahead will remain vital for improvement in headline export numbers going ahead.    

Slowdown in global IT spending is also a concern which is impacting IT exports. According to latest report by Gartner (Technology Research and Consulting firm), growth in IT spending is expected to slowdown to ~1% in 2022 compared to 10% growth in 2021. Economic slowdown and inflationary pressures are leading to IT spending cuts.

As of October 2022, TTM (Trailing Twelve Months) IT exports have increased by 13% YoY to US$2.64bn. This is compared to 46% YoY growth at the same time last year (October 2021).

Net Exports (Exports-Imports) on TTM basis in Oct-2022 however have grown by 19% YoY to US$2.09bn. October 2022 monthly number has increased by 27% YoY to US$168mn

Segment wise breakdown for the month of October 2022 indicates that Telecom Services increased by 42% MoM and by 38% YoY to US$48.9mn and Computer Services were flat MoM and increased by 8% YoY to US$171.8mn.

The total share of Telecom/Computer Services exports for October 2022 stood at 22%/78% respectively compared to 18%/82% in October 2021.

In 4MFY23, however, there is an increasing trend of Computer share with Telecom/Computer share of exports for 4MFY23 standing at 19%/81% compared to 21/79% share in 4MFY22.

Net IT Exports during 4MFY23 have increased by 14% YoY to US$721mn compared to 3% YoY growth in overall exports for 4MFY23.

The annual number of FY22 presents a broader growth trend of value-addition with Telecom/Computer Services share standing at 19%/81% compared favorably to share of 39/61% in FY17.

Growth of IT companies and training of IT professionals has have led to rise in share of Computer services. This value addition is leading to higher Net Exports (Exports minus Imports) of the sector since Computer Services exports are mostly human resource driven.

Going forward, training of IT professionals, removal of key sector bottlenecks and revival of global economy will remain key for future of IT exports.

Courtesy- Topline Securities

Posted in Import and Export News.

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