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    What Are The Main Reasons Behind The Large Trade Deficit Of Pakistan?

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    mehreen83

    Over the stretch of the past six to seven years, Pakistan's trade deficit has only worsened instead of improving. The element of self-reliance lacking in the mechanism of Pakistan's economy is one major reason as to why Pakistan has to import goods mainly on heavy prices from other countries. In comparison to the heavily priced imports that mostly comprise of manufactured goods, the exports of Pakistan in the international market constitute chiefly of raw materials or semi-manufactured goods that are a great deal cheaper and lesser in demand as compared to the market of manufactured goods. Another factor that contributes towards exacerbating Pakistan's trade deficit is the paucity of variety in the gamut of Pakistani exports. The textile sector constitutes a major part of our exports and although the exports of Pakistan have increased from before they still contribute very little to the overall Gross National Product of the country.

    answered 2 years ago   

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    Pakistan's trade deficit has also increased because of rising 1) oil imports 2) industrial equipment imports. Around 30% of the import bill is made up of oil imports each year and it accounts for almost half of the increase in the import bill during the last 5 yrs. One reason is falling value of dollar (to import the same oil volume) and the other is rising consumption. Industrial equipment such as telecom, power generating, aircrafts, ships etc purchases have increased. Industrial equipment makes another 30% of our import bill. Consumer goods imports have less of an impact on the import bill than the two other components mentioned above.
    The only way to reduce the import bill is to develop renewable energy sources, and to develop the high value manufactured goods industry in Pakistan.

    comment made by Jackcaldor 6 months ago    Report

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