Pakistan's trade deficit widens as export growth loses momentum
Pakistan's external trade is again flashing a warning signal, with export growth losing momentum while imports continue to rise sharply, according to Ateeq ur Rehman, an economic and financial analyst. That divergence is putting renewed pressure on the country's trade balance and contributing to a further expansion of the trade deficit, he said.
He attributed exporters' difficulties to high production and manufacturing costs, citing severe pressure from high electricity and gas tariffs, record fuel prices, high mark-ups and expensive financing, heavy taxation, delayed refunds, regulatory hurdles, costly imported raw material and rising logistics and shipping costs. A shortage of vessel space and disrupted cargo movement have added to the strain, he said, along with the heavy losses exporters suffered during strikes by transporters.
A truckers' strike is a recurring worry that creates an alarming situation, he said, noting that the entire production system depends on the timely supply of raw material and delivery of finished goods. When an export consignment fails to reach buyers on time, industries face penalties, price cuts and claims for damages, he said. Any suspension or interruption in cargo movement, he added, could have far-reaching economic consequences, including paralysed factory operations, disrupted production schedules, delayed export shipments and potential breaches of contractual commitments. Export consignments should be allowed safe and easy movement during any disruptions, he argued.
Pakistan's exports of goods and services stand at around USD38/40 billion, or about 8 per cent of GDP, one of the lowest shares in the global value chain, according to Ateeq ur Rehman. Reaching USD100 billion within two years would require export growth of about 40 per cent every year — a big challenge, he said, though one that many countries have met through greater capacity, stronger institutional capabilities, good governance and better skills.
He also said high and towering duties on intermediate and capital goods make local producers less competitive. When production lines for goods and services move efficiently, businesses can plan more reliably and the supply chain becomes more resilient, he said.
