Changing Trends of Exports and Imports of Pakistan
Negative balance of payment and its impact on economy
In this article, I will discuss the effect of changing trends in exports and imports on Pakistan’s balance of trade and economy over the years.
Contents
What does it mean by the term ‘trends in imports and exports?
Trends in exports and imports refer to the sustained status of imports and exports in terms of their variety and currency value over a period of years. The changes that occur in this persistent status of variety and currency value of imports is referred to as changing trends in imports and exports.
Examples of changing trends in exports and Imports
At the time of independence, Pakistan’s imports consisted of mostly raw materials. From 1960 onwards, Pakistan started to export a number of processed and manufactured goods. This change in the variety of exports is an example of a change in the trend of exports. Previously, the trend was exports dominated by raw material e.g. raw cotton, etc. which was replaced by exports of processed and manufactured goods to a larger extent.
Similarly, the currency value of both imports and exports of Pakistan has been increasing over the years. In this case, the trend has been a persistent increase in the value of both exports and imports. But, the value of imports has been always more than the value of exports over the years. Thus, another trend without a change is that value of imports is always more than the value of exports.
The table given below illustrates the value of exports and imports in terms of their currency value over the years:
| Year | Value of Imports (million Rs.) | Value of Exports (million Rs.) |
| 1974-75 | 20, 985 | 10,288 |
| 1984 – 85 | 89,783 | 37,979 |
| 1994 – 95 | 320,892 | 251,173 |
| 2004 – 05 | 1223,079 | 854088 |
| 2007 – 08 | 1718,527 | 824,715 |
Impact on the balance of trade
The table given above illustrates that the value of both exports and imports has increased. But the value of exports has always been greater than the value of imports. This trend has resulted in a negative balance of trade.
Impact of the negative balance of trade on the economy
Because of the negative balance of trade, the country has faced a shortage of foreign reserves. Without foreign exchange, Pakistan would fail to meet its needs from outside such as oil, technology and defense equipment.
The easy way to earn much needed foreign exchange is to increase exports both in variety and quality. But unfortunately, the country has failed to achieve this goal for the last many decades. The easy way that successive governments have found is to get foreign exchange in foreign loans from international financial organizations and other countries.
Hefty loans have been taken from the International Monitory Fund (IMF), World Bank, Asian Development Bank, etc.. The countries from where Pakistan has been taking loans include the USA, Saudi Arabia, and China.
Foreign loans are not without compromises and unwanted dictations. Once trapped in huge foreign debt, the country starts to lose its financial freedom. The loaning states and agencies also start to dictate the financial and monetary policies of the country.
In Pakistan, it has been observed that Gas, electricity, water bills and taxes on basic commodities and prices of petroleum products are increased frequently on such dictation causing economic distress to people. The average life standard of people has sharply decreased. They cannot afford quality education, health, a balanced diet, god clothing and other facilities of life. Tens and thousands of people have fallen into the lower middle and lower classes from the middle class.
Sir if you kindly review the below lines of the above text……if exports possess more value then the BOT must be positive
Impact on balance of trade
As It is evident from the above table that the value of both of the exports and imports of the country has increased. But the value of exports has always been more than the value of imports. This trends resulted in negative balance of trade and trade deficit.
Dear sir, first of all thank you so much for taking time to read this article and coming up with the kind feedback. The table given in this article illustrates that the value of imports has been always more than the value of exports. Consequently, Pakistan’s balance of trade has been always negative. In other words, Pakistan has experienced trade deficit over the years.
so nice of you dear sir….