Pakistan’s Bureau of Statistics reported an increase in the trade deficit in July 2021 of 86%. One of the economic problems Pakistan faces due to its consumption-oriented approach and stagnant exports is the trade deficit.
Despite a huge bank of resources and a large population made up of a mass of young people under 35, the trade deficit continues to increase. Although external factors, including volatility in international markets and the economic crisis induced by Covid-19, are responsible, Pakistan must take some responsibility for its actions.
Pakistan Trade Balance – July 2021
Pakistani #exports increased by 16% year-on-year, while #imports increased by 48% over the same period. As a result, the trade deficit swelled to US $ 3,104 million (up 85.53% year-on-year).#Pakistan #economy #Trade pic.twitter.com/mwdulJrFPa
– Capital stake (@CapitalStake) August 9, 2021
With measures to curb the spread of Covid-19, exports have fallen to less than $ 2 billion. On a month-to-month basis, exports were down 25.3%, which is actually a worrying factor for policymakers. Additionally, with the volatility and uncertainty of major export markets due to restrictive Covid-19 measures, exports are expected to slow.
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In addition, the value-added sector had warned the government of the possibility of a shortage of raw materials. Stakeholders warned the government that if the required amount of cotton yarn was not produced, the country could lose export orders that would eventually be diverted to rival countries.
#PTI the government’s battle against the inflated trade deficit is being reversed as it widened by 81.4 percent in the first month of the current fiscal year (FY22), mainly due to an increase almost double the imports compared to the exports of #Pakistan. https://t.co/fA6dzVszmN
– Asad Ali Toor (@AsadAToor) August 3, 2021
The trade gap has widened since December 2020. The increase in the trade deficit is mainly due to exponential growth in imports with relatively slow growth in the country’s export earnings. The import bill is increasing mainly due to increased imports of petroleum, wheat, sugar, soybeans, machinery, raw materials and chemicals, cell phones, fertilizers, tires and antibiotics, and vaccines.
The trade deficit for July-2021 stood at $ 3.1 billion, up 86% yoy (-14% mo) pic.twitter.com/fh2247N2PA
– Topline titles (@toplinesec) August 9, 2021
One of the determinants of Pakistan’s breathtaking economy is the stagnation of exports. The obvious explanation is anti-export bias, inconsistent export policy, lack of added value, dependence on a narrow export base, low labor productivity and a lack of technological innovation which acts as a barrier between Pakistan’s desires to embark on exports despite being given trillions in subsidies to exporters, especially the textile industry. Even though a large volume of aid as well as a 25% cut in electricity bills under the reform program to boost exports is being provided, but with little or no results.
Therefore, if Pakistan is to transform its economy from a consumer-oriented economy to an export-oriented economy, it must invest in real development. Rather than cheering for some rising numbers in export data, Pakistan needs to formulate long-term policy measures so that export growth becomes sustainable.
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In this regard, taking examples from Bangladesh, the Singaporean growth model and the East Asian tigers are imperative. In addition, the government of the day must ensure equal treatment for all exporters, from large-scale manufacturers to small IT companies and freelancers who work for someone outside the country in order to generate income for the diversification of markets. products.
Digitization of the economy
With the digitization of the economy in response to the Covid-19 lockdown and social distancing measures, our citizens must become tech-savvy and scholars about the changing technicalities of the buying and consuming cycle. All this must be followed by the formulation of a comprehensive and coherent economic policy where education, health and vocational training are aligned with the export sector.