Dec 24 - 30, 20

In the wake of declining industrial production, escalating inflation, current account deficit, huge burden of foreign debt retirement and losses of the state-owned enterprises (SOEs), not only the economy was facing over Rs 380 billion loss each year, Pakistan's share in global trade is facing constant decline.

Pakistan's share in global trade fell to 0.14-per cent in 2011 from 0.21-per cent in 1999 despite claims of the government about surge in the exports to the world market.

Statistics show that in absolute terms, Pakistan lost its market share by one third, whereas India has doubled its market share during the last 12 years. In 1999, India's share in global trade was 0.67-per cent, which scaled up to 1.28-per cent in 2011 despite global recession. Even Bangladesh's global market share in 1999 was 0.06-per cent, which now has doubled and reached to 0.14-per cent. In South Asia, as per estimates, Bangladesh is set to clinch the title of the second biggest economy after India.

Pakistan is the only country which has a stagnant global market share despite the fact the government has taken a range of measures for liberalising its imports regime as compared to its neighbouring countries.

Pakistan's exports fell to $23.64 billion in 2011-12 from $24.82 billion in 2010-11, showing a decline of 4.75-per cent. Contrary to this, world trade expanded by five-per cent in 2011 compared to 13.8-per cent growth in 2010.

As per data made available to PAGE Pakistan exports to Asian countries slightly fell to $11.709 billion in 2010-11 from $11.556 billion in 2011-12, showing a decline of 1.3-per cent. However, the share of Asian countries in Pakistan's exports stood around 47-per cent.

Similarly, Pakistan's exports to Europe also fell to $5.957 billion in 2011-12 from $6.537 billion in 2010-11, showing a decline of 8.87-per cent. After Asia, Europe has around 26-per cent share in Pakistan's total exports proceeds.

The third biggest market for Pakistan's export is American region, where Pakistan's exports declined to $4.227 billion in 2011-12 from $4.755 billion in 2010-11, reflecting a decline of 11-per cent. The American region has approximately 19-per cent share in Pakistan's exports market.

After striking a free trade agreement with China, Pakistan's imports from China reached to $6.61 billion in 2011-12 from $4.41 billion in 2009-10, showing an increase of 49.9- per cent.

After FTA with China, China has emerged as a major import source for Pakistan for almost all goods - raw materials, industrial goods or consumer items. While Pakistan's exported only $2.08 billion worth goods to China in 2011-12 as against $1.15bn in 2009-10.

Contrary to this, Afghanistan has emerged the leading export market for Pakistan where Pakistan's exports increased to $2.16 billion in 2011-12 as against $1.57 billion in 2009-10, showing an increase of 38-per cent. Pakistan has no free trade agreement with Afghanistan, but exports increased manifold in the past few years negating the argument that free trade agreement increase the flows of exports.

Pakistan is a member of the World Trade Organisation, and has bilateral and multilateral trade agreements with many nations and international organizations. It is part of the South Asian Free Trade Area agreement and the China-Pakistan Free Trade Agreement.

The economy of Pakistan is still under threat and there are no evident measures being taken by the government to stabilise the economy. The International Monetary Fund (IMF) also expressed concern over the health of the falling economy of Pakistan and said Pakistan would face hard economic times in the years to come.

The foreign direct investment had dropped to a drastic level on unstable economic conditions besides some poor policies of government in macro financial sector.

Experts believe that the printing of currency was causing pressure on macroeconomic stability and accelerated core inflation to more than 12-per cent. The government is trying to print currency notes equivalent or more than 2.5-per cent of the gross domestic product (GDP), as it has no concrete programmes ahead, an expert said.

The high government borrowing from State Bank and commercial banks to meet transactions on account of import bill payments and subsidiary on commodities is the root cause of inflationary conditions, he added.

The country's external debt dynamics were challenging, with more than $4.8 billion of debt repayment due in FY13. The key macro indicators were still weak, as persistent inflation and pressure on the fiscal and current accounts, remained the key challenges for the economy.

Low investment and energy shortages had put pressure on direct economic growth and high fiscal deficit remained a major risk to the macro economy. The country will not achieve GDP of more than 3-3.5 percent in the fiscal year 2012-13, experts believe.

The current account deficit is around 1.45 percent of GDP while the country faced a deficit of $4.680 billion during FY12, against the surplus of $214 million in the preceding year. This trend would continue in 2013 on account of huge foreign debt repayments and an expected rise in international oil prices, besides heavy borrowing of government from commercial banks.

Pakistan has so far repaid $2.52 billion of the IMF's Stand-by Arrangement (SBA) facility out of the total debt of slightly more than $7.1 billion loan, Pakistan acquired in 2008 after fragile economic conditions and for supporting the economy. The outcome is the pressure on Pakistan's interbank rate, which is continuously under pressure as it touched highest-ever level of Rs 96.60 against the dollar.

The national economy was facing manifold challenges on one hand while on the other hand pragmatic steps were not taken in right direction to put the economy on track. Adhocism is the hall mark of present economic managers. For bringing stability tough decision and right steps in right directions are needed. If we want to achieve dignified status in the Comity of Nations, we would be ready for rendering sacrifice for the country and play due role.