Issue Brief on “CPEC and Export Performance of Pakistan”

Exports are a vital component of a country’s GDP. They have a direct impact on economic growth, creation of employment and balance of payments. Pakistan has always been vulnerable to downfalls in its balance of payments which destabilises its macroeconomic outlook. The Economist Intelligence Unit has given Pakistan’s ‘Foreign Trade and Payments Risks’ a score of 75 out of 100 (100 = riskiest). In comparison, India has a score of 50 while Bangladesh has a score of 57. In 1990, Pakistan’s exports were $4.9 billion against Bangladesh’s $1.6 billion. In the last fiscal year, Pakistan’s exports dropped by more than 12% and were recorded at $20.8 billion, whereas Bangladesh’s exports grew by 10% to $34.2 billion. These figures clearly indicate that Pakistan is struggling to remain competitive in terms of trading in the region.

Boosting Pakistan’s exports are necessary to reduce the country’s debt burden and stabilise the economy. The China-Pakistan Economic Corridor (CPEC) will reduce transportation costs and time for local businesses. This will attract investment and encourage local producers to export their products.Three-fourths of projects under the CPEC are energy related while availability of energy has already improved considerably due to the efforts of the present government. Despite the reduction in load shedding, improvements in infrastructure and reduced costs of importing oil in recent years, trade deficit has continued to rise. This goes to show that Pakistan has to rely on other important contributors as well to increase its volume of exports.

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