Top 10 reasons why export in Pakistan is decreasing

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Pakistan’s exports dropped by 13%, as total exports dipped to $15.6 billion in the first nine months of the outgoing fiscal year from $17.9 billion a year ago, a drop of $2.3 billion. The trend of continuous fall in exports has partly been compensated by declining global oil and commodity prices that have led to a 4.3% decline in overall import bill. Steep fall in oil prices is clearly reflected in overall import bill which resulted in $3.3 billion savings, from an import of petroleum products. The Top 10 reasons why export in Pakistan is decreasing are considered to be:

Top 10 reasons

  1. A slowdown in Pakistan’s export partners’ economic growth – is a double-edged sword. On one hand, it means that the decline in Pakistan’s exports is not the fault of our industries, but on the other hand, it also means that there is nothing to be done but waits for economic conditions in our export markets to improve.
  2. Falling exports are due to both supply and demand-side factors. On the supply side, structural impediments in commodity producing sector, higher cost of production, low-level skill and uncompetitiveness also hurt exports.
  3. Regional comparison of the cost of doing business shows that Pakistan’s wages, interest rates, electricity, gas and water tariff are a lot higher and have created hurdles for smooth business.
  4. Textile exports are largely flat, mainly due to higher prices this year compared to last, the energy crisis is no doubt a severe impediment to several companies, but it hits the relatively inefficient spinning and weaving industries within the textile sector far worse than it affects the composite textile sector.
  5. Poor policies of the incumbent government have brought Pakistan’s most valuable sector on the verge of collapse.
  6. Idiosyncratic changes in the environment in many different industries that happen to be affecting exports. The data does seem to support this hypothesis. Of the four major export categories used by the PBS – food, textiles, petroleum, and other manufactured goods – it is the last category that has seen a sharp 18.4% decline in value of exports, from $2 billion to $1.65 billion.
  7. Small and backward industrial sector is based on low level of capital formation, technology, training and education and over-dependence in the agriculture sector. 13.7% labor force is attached to the industrial sector in Pakistan.
  8. Low Level of productivity is also considered to be one of the main factors.
  9. There is the absence of developed minded leadership in economic activities in third world nations like Pakistan.
  10. Revenue and expenditure policy of the government is not stable in developing countries. The government has to change the fiscal policy according to the will of its own people.

The above are some of the obstacles in way of economic development. All these features are the cause of low rate of capital formation, poverty, and creation of a vicious circle of poverty.

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