During the recent war we are facing couple of economic shocks like the widening of our trade deficit which may be in billions and a real set back to the growth of export. In the past, our exports have been declining over the years. We expected a modest growth rate of 1.5 percent where is there is a decline in exports of 5%. We projected the growth rate in imports as 8.5% whereas the growth rate has been significantly higher at 12.3% said ateeq ur rehman ( economic & financial analyst).
Exports fell, while imports surge to double, this is being the main cause of trade deficit.
He added that the “Export emergency” is not a lobbying slogan – it is a red alert for an economy already struggling to stay afloat.
More broadly, recent tensions and potential disruptions in the Strait of Hormuz are posing economic challenges for Pakistan, too and particularly for export-oriented industries.
When shipping in the strait is disrupted, freight and insurance costs is rising sharply and the shipping companies are en-routing vessels, suspending bookings, which is escalating logistics costs and delays shipments, thus impacting Pakistan’s exports due to rising fuel costs and shipping delays, production expenses, etc .
The biggest hurdle is, Pakistan imports 70 to 80% of its Crude Oil and LNG from Gulf countries such as Saudi Arabia and the UAE, and most of this oil travels through the Strait of Hormuz. Pakistan spends over USD 10 billion annually on petroleum imports, making its economy very sensitive to oil price increases and effecting the foreign exchange deficits, pressure on balance of payments and growing of current account deficit added ateeq.
For a fact, Pakistan is not losing exports due to lack of capacity or demand, it is because of the circumstances that its cost structure has become globally un competitive. The energy pricing disparities, in consistent taxation, delayed refunds, un predictable policy signals and the present existing logistic support services and supply chain problems.
We as Industry experts note that prolonged disruptions could affect manufacturing costs and shipment schedules, potentially impacting the competitiveness of Pakistan’s exports in international markets. Higher energy costs may place additional pressure on exporters already navigating global market uncertainties. In light of these risks, stakeholders emphasize the importance of strengthening supply chain resilience, improving energy efficiency, and exploring alternative trade , transport routes to minimize potential economic disruptions and locating prospective trade markets.
