Pakistan kicked off the new financial year with a trade deficit worth $3.058 billion, an estimated 81.4 percent. Through restricting imports and adopting export-growth oriented policies, the government has recovered some ground. However, as the economy normalises slowly, there has been a change in spending as most of our finances now go towards importing expensive commodities and luxury goods. Only in moderation will this be acceptable. The government must adopt a holistic approach that only targets necessary imports and focuses on expanding our export potential.
Currently, our imports are valued at $5.405 billion compared to exports worth $2.347 billion. This entails that we are funnelling out twice the amount of money than we are bringing in. This is a phenomenon that we have been experiencing since December 2020 as essentials like petroleum, machinery, raw materials, chemical, fertilisers, antibiotics and vaccines have jacked up our import bill exponentially. An additional pricy cost—$1.8 billion last month alone—comes from the import of digital products like mobile phones and laptops particularly. The threat of undoing all the progress we made to mitigate the damage done to our economic standing is very real, especially if the government does not enact policies that bridge the trade deficit.
It is at this point that the government has to make smart decisions and prioritise certain sectors over the others. While we cannot afford to limit the imports of commodities like petroleum, or even imports within the digital sector. This is necessary particularly because the government will then give the digital sector a chance to grow, evolve and cater to the domestic market without being wiped out by international competition. Thus cutting down on luxury items—but clearly establishing what this term means to us—must be the focus going forward. The government must continue to cherry pick its imports, keeping in mind their respective degrees of necessity. In the end, as exports continue to grow, the probability of bridging the trade deficit will become much higher.​
Published in Thenation on 4th August 2021