PAKISTAN TRADE DEFICIT

By :Ammara Haque 13883

M. Asif Jawad M. Hassan

TRADE DEFICIT:

• An Economic measure of a Negative Balance of Trade in which a Country's Imports Exceeds its Exports. A trade deficit represents an outflow of Domestic Currency to Foreign Markets.

• In simple words:• A trade deficit is caused when a country cannot produce all it

needs.

EXPORTS IMPORTS

POSITIVE AND NEGATIVE ASPECTS OF TRADE DEFICIT:• A trade deficit is not a bad thing. It raises the standard of living of a

country's residents, since they now have access to a wider variety of goods and services for a more competitive price.

• Also It can reduce the threat of inflation, since the products are priced lower. A trade deficit can also indicate that the country's residents are feeling confident, and wealthy, enough to buy more than the country produces.

• However, a trade deficit can cause jobs outsourcing. That's because, as a country imports certain goods rather than buying domestically, the local companies start to go out of business.

• The domestic business itself will lose the expertise needed to produce that good competitively. As a result, fewer jobs in that industry are created in the home country. Instead, the foreign companies hire new workers to keep up with the demand for their exports.

PAKISTAN’S TRADE DEFICIT:

• Pakistan recorded a Trade Deficit of (1, 00,609) PKR Million in January of 2015. Balance of Trade in Pakistan averaged (23,011.73) PKR Million from 1957 until 2015, reaching an all-time

• High of 6, 457 PKR Million in June of 2003

• Record low of (2, 80,964) PKR Million in August of 2014.

PAKISTAN’S BALANCE OF TRADE:

Pakistan’s Trade

Last Previous Highest Lowest Unit

Balance of Trade

(1,00,609.0) (1,71,767.0) 6,457.0 (2,80,964.0) PKR Million

Exports 2,07,806.0 2,17,338.0 2,75,483.0 51.0 PKR Million

Imports 3,08,415.0 3,89,105.0 4,72,228.0 96.0 PKR Million

Overview of Pakistan’s Trade Number:

Pakistan Trade Last Previous Highest Lowest Unit

Balance of Trade (1,00,609.0) (1,71,767.0) 6,457.0 (2,80,964.0) PKR Million

Exports 2,07,806.0 2,17,338.0 2,75,483.0 51.0 PKR Million

Imports 3,08,415.0 3,89,105.0 4,72,228.0 96.0 PKR Million

External Debt 64,338.0 64,385.0 66,490.0 33,172.0 USD Million

Remittances 4,287.0 4,695.00 4,695.0 906.0 USD Million

Gold Reserves 64.4 64.4 65.4 64.5 Tonnes

Crude Oil Production

92.3 95.1 95.1 49.7 BBL/D/1K

Foreign Direct Investment

2,816.40 2,665.30 3,184.30 2,099.10 USD Million

Reason for Pakistan’s Trade Deficit:

• Manufacturing industry(not mature)

• Child labor(sports goods,carpet,leather,fan)

• Political issues(ransom,union,strikes)

• Trade surplus countries(china and Korea)

• Policy for sme`s (Small medium Enterprises)

• Housing schemes and agriculture lands

• Taxes and heavy tariffs(on imports )

• Ministry for protection of rights

• Energy crisis- Faisalabad crisis

• Availability of cheap products 11.Loans on political basis(entrepreneur)

IMPORTS OF PAKISTAN: IMPORTS:

Petroleum products

Machinery and Parts

Plastics

Tea, Coffee and Edible Oil

Transportation Equipment

Paper and Paperboard

Iron and steel related products

Imports in Pakistan decreased to 3, 08,415 PKR Million in January of 2015 from 3, 89,105 PKR Million in December of 2014. 

PAKISTAN’S IMPORTS:

Actual Previous Highest Lowest Dates Unit Frequency

3,08,415.00 3,89,105.00 4,72,228.00 96.00 1957 - 2015 PKR Million

Monthly

IMPORTS AND THEIR SOURCES:

• Main imports are Mineral fuels (16 percent of the total imports)

• Manufactured goods (16 percent).

• Miscellaneous articles (12 percent),

• Beverage and tobacco (12 percent),

• Animal and vegetal oils and fats (10 percent),

• Crude materials except fuel (9 percent), chemicals (9 percent),

• Machinery (8 percent)

• Food and live animals (7 percent).

• Countries to IMPORT:

• Main import partners are China (19.7 percent of the total imports), United Arab Emirates (12.1 percent), Saudi Arabia (12 percent), United States (3.2 percent) and Kuwait (6.3 percent).

PAKISTAN’S EXPORTS:

• Exports in Pakistan decreased to

• 2, 07,806 PKR Million in January of 2015 from

• 2, 17,338 PKR Million in December of 2014.

•  

• Exports in Pakistan averaged 33,895.02 PKR Million from 1957 until 2015, reaching an all-time

• High of 2, 75,483 PKR Million in September of 2013

• Record low of 51 PKR Million in April of 1958.

PAKISTAN’S EXPORTS:

Actual Previous Highest Lowest Dates Unit Frequency

2,07,806.00 2,17,338.00 2,75,483.00 51.00 1957 - 2015 PKR Million

Monthly

PAKISTAN’S MAIN EXPORTS: • Mineral fuels (19 percent of the total shipments):

• Manufactured Goods (19 percent): Sports and Surgical tools –Sialkot ,Knife and cutlery – Wazirabad,Washing Machines, machinery spare parts and Motors – Gujranwala(Super Asia, Climax, Golden) ,Fans – Gujrat and Gujranwala, Carpets and Rugs - Lahore, Peshawar and Karachi and Leather Goods.

• Beverage and tobacco (13 percent): Fruit Juices (Shezan, Frooto, Maza, Bambino and Country juices are major exporters)

• Food and live animals (11 percent): Rice, Wheat, Seafood, Sugar Cane

• Chemicals (11 percent): Tanning chemicals, Dying chemicals, Denim chemicals, Washing chemicals

• Machinery (8 percent): Fridge ,Refrigerator etc (Pak electron, Dawlance, Super Asia etc)

• Miscellaneous articles (8 percent):

• COUNTRIES TO EXPORT: Main export partners are United States (13.6 percent), China (11 percent of the total export), United Arab Emirates (8.5 percent) and Saudi Arabia (8.5 percent).

• (March 2, 2015) 

PAKISTAN’S GDP: • The Gross Domestic Product (GDP) in Pakistan expanded 4.14 percent in

2013/14 fiscal year. GDP Growth Rate in Pakistan Averaged 4.92 percent from 1952 until 2014, reaching an all-time

• High of 10.22 percent in 1954

• Record low of (1.80) percent in 1952.  

• GDP Growth Rate in Pakistan is reported by the Pakistan Bureau of Statistics.

• GDP IN BILLION $:

• The Gross Domestic Product (GDP) in Pakistan was worth 236.62 billion US dollars in 2013. The GDP value of Pakistan represents 0.38 percent of the world economy. GDP in Pakistan averaged 56.23 US$ Billion from 1960 until 2013, reaching an all-time

• High of 236.62 USD Billion in 2013

• Record low of 3.71 USD Billion in 1960.

PAKISTAN’S GDP:

Pakistan GDP Last Previous Highest Lowest UnitGDP 236.62 224.88 236.62 3.71 USD Billion

GDP Growth Rate 4.14 3.7 10.22 -1.8 Percent

PAKISTAN’S GDP GROWTH RATE:

Actual Previous Highest Lowest Dates Unit Frequency

4.14 3.70 10.22 -1.80 1952 - 2014

percent Yearly

COUNTRIES SIMILAR IN GDP:

Countries GDP Reference Previous Highest Lowest Unit

Pakistan 236.62 13-Dec 224.88 236.62 3.71 USD Billion

Finland 256.84 13-Dec 247.14 271.97 5.22 USD Billion

Chile 277.2 13-Dec 266.26 277.2 4.2 USD Billion

Egypt 271.97 13-Dec 262.83 271.97 4 USD Billion

Greece 241.72 13-Dec 248.42 341.6 4.4 USD Billion

Iraq 222.88 13-Dec 215.84 222.88 1.7 USD Billion

Kazakhstan 224.41 13-Dec 203.52 224.41 16.9 USD Billion

Recommendations: • Focus on Regional Trade

• Create Regulatory Efficiencies

• Promote Agro-processed exports

• Increase Exports from less developed Regions of Pakistan

• Promote exports of Services Sector

• Enhance access to export financing and credit guarantees

• Revamp Export Promotion Agencies

• Mobilize new investment in export oriented industries

• Facilitate Exporting industry overcome energy crisis

• Enhance Product and Market Development and Diversification

• Undertake effective Trade Diplomacy

• Increasing Green Exports

• Rationalize the Tariff Protection Policy

• Enhance Role of Women in Exports

• Reform and Develop Domestic Commerce

Few points which really need the attention of the government:

• Focus on regional Trade:

• Establishment of Pakistan Land Port Authority (PLPA) to Strengthen Regional Trade

• Setting Up of EXIM Bank

• Promotion of Services Sector Exports

• Mark-up support on prevailing LTFF for future import/purchase of machinery

• Mark-up Rate support on Export Finance Scheme (EFS) to selected export sectors

• Marketing Development Assistance for Regional countries

Conclusion: • Pakistan needs to revisit its regional and global trade policies.

• It must fully embrace trade with India and Central Asia by opening up more routes and acceding to the TIR Convention.

• Pakistan’s ports could provide Central Asia with the shortest land route to sea and there is tremendous export potential among the Central Asian markets.

• With regard to global trade, Pakistan must restructure its taxation policies and look for ways to integrate its comparative advantages within global supply chains.

• It must also reassess its current protectionist policies, which are stifling the economy and undermining the country’s ability to compete in the global market.

• Instead, Pakistan must allow domestic industries and infrastructure to operate in an environment that maximizes its potential.

References:

• http://www.tradingeconomics.com

• http://www.investopedia.com

• Pakistan Bureau of Statistics