According to data released on Wednesday, Pakistan’s IT exports for January 2023 decreased by 23% MoM, the lowest since May 2022, with computer and telecom services declining by 20% and 35% MoM, respectively. The decline is partly attributed to the existing 10-15% gap between inter-bank and grey market rates of the US Dollar for most of the month.
However, IT exports are expected to recover as the gap between market rates is reduced at the end of January 2023. On a YoY basis, IT exports increased by 2% in January 2023, mainly due to an 8% YoY increase in telecom services. Despite the YoY increase, the IT exports for January 2023 are below the 6-month rolling average of $221 million.
The slowdown in IT exports is a reflection of the global slowdown in IT spending, with Gartner, the Technology Research and Consulting firm, revising its growth forecast for IT spending to 2.4% in 2023 from an earlier projection of 5.1%.
The Ministry of Information Technology in Pakistan has established an ambitious export target of $5 billion for the fiscal year 2023. However, with the current monthly average of $218 million, it appears that the country may fall far short of this goal.
As of 7 months into the fiscal year 2023, IT exports have increased slightly by 2% YoY to $1.52 billion, largely due to a 3% YoY growth in computer services to $1.22 billion.
Despite this small increase, the month-on-month decline in January 2023 has resulted in a 6.8% decrease in IT exports compared to the previous month. This is in contrast to a 6.2% decline in January 2022 and an 8.1% increase in December 2022. In the first 7 months of the fiscal year 2023, total IT exports stand at 7.4%, compared to 6.9% in the same period in 2022.
A breakdown of IT exports by segment for January 2023 shows a 35% month-on-month decrease in telecom services, which increased by 8% YoY to $29.7 million, and a 20% month-on-month decrease in computer services, which increased slightly YoY to $159.9 million. In January 2023, the share of telecom and computer services exports was 16% and 84%, respectively, compared to 15% and 85% in January 2022. From July 2022 to January 2023, the share of telecom and computer services exports was 19% and 81%, respectively, compared to 20% and 80% in the same period in 2022. This was primarily driven by a 3% YoY increase in computer services exports, due to a 12% growth in software exports and a 6% in software consultancy.
While overall IT exports grew by only 2% YoY in the first 7 months of the fiscal year 2023, the net IT exports (exports minus imports) for the same period increased by a significant 20% YoY to $1.34 billion. On a trailing twelve-month basis as of January 2023, the net IT exports grew by 19% YoY to $2.2 billion, and the January 2023 monthly number increased by 23% YoY to $178 million.