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Challenge of trade deficit

Challenge of trade deficit

The latest unofficial data puts the trade deficit of the country at record level of $30 billion during the first 11 months of the current fiscal year which is at least 42 percent more as compared to the deficit during the same period of the last financial year. Though exports have picked up during the last few months, but declined by three percent during the year to $18.5 billion. On another note, the import volume has gone up by 21 percent to $48.5 billion, pointing out a bitter fact that imports are over two-and-a-half times more than the exports. Unfortunately, Pakistan relies on the export of textile products most of the time without giving a second thought or importance to value added goods produced by various industries. The second most thrust is on the export of edibles such as rice, wheat, fruits, etc which are desperately required within the country. In a bid to enhance exports to earn foreign exchange, rebate is also offered to the exporters of food items, which shows deep seated flaws in the centers which devise export policies. Lack of interest of the government officials in the promotion of business also plays a role in the trade woes of the country.

When the oil prices fell in the international market, it was hoped the country would benefit from the import of cheap oil, but the policymakers of this country are habitual in missing the bus. The world is shifting from hydro power electricity to renewable energy, including solar energy. Pakistan has the potential to produce not only solar panels, but also voltaic cells to become volume leader in the international market. Pakistan’s cottage industry also has strong base and can play a leading role in the economic development of Pakistan and enhancement of exports if encouragement by the government. However, every government agency is with a mission to foil every attempt to stimulate the industrial sector. The trade deficit can be minimized if agriculture sector is provided with concessions. Instead of exporting food items, agriculture industry should be encouraged to produce finish products. The new budget is due in weeks and it is a good opportunity for the government to put the country on the right track. The growing trade deficit eats up all the economic gains and the situation could only be improved by enhancing the export of value added goods.