Pakistan's share in world trade drops 9.5pc

The high economic growth in Pakistan has not improved its trade performance as its share in world trade has declined by 9.5 per cent in 2007, while its competing economies China and India recorded an increase of 11.3 per cent and 9.3 per cent respectively.In fact, the world trade indicators released by the World Bank point out that Pakistan’s weak trade performance clearly dragged down the entire South Asia, which contains only a few, mostly large, countries.According to the report, Pakistan also has a low trade integration ratio of 41.9 per cent (trade as percentage of GDP) when compared with India’s 45.2 per cent and Bangladesh’s 47.5 per cent. The real trade growth in Pakistan was 0.9 per cent while in China, it was 21.7 per cent.The report points out that the slowest trade growth rates were for Pakistan and Sri Lanka (less than 1 per cent and 6 per cent respectively). Rising food prices in Pakistan, related to developments in international markets and shortages in domestic supplies, led the government to restrict exports of wheat and rice. This had a significant impact on Pakistan’s trade performance, it added.Economists point out that the decline in trade share of Pakistan at a time when world trade grew by over seven per cent should be an eye opener for economic planners. They said that time has come when the thrust of growth should be diverted towards productive sectors instead of promoting growth in the services sector. Unlike India or China, the services sector in Pakistan remained confined to the domestic market only. It created fewer jobs as well.On average, South Asian states have some of the worst business environments across all regions. None of its countries is in the top 50 in the ‘ease of doing business’ rankings, and only two are in the top 100, Maldives (ranked 60th) being the region’s best performer and Pakistan (76th).

World Bank points out that countries that have the best policies and institutions overall, also tend to have a stronger and more consistent trade performance. This point should be taken seriously by the economic managers of the country as institutional performance in Pakistan is still on the decline.

Besides flawed government policies, the decline in Pakistan’s trade share is also due to the fact that the garment exporters in developing countries face restrictions on their exports on average that are more than double those faced by the rest of the developing world. Garments and textiles account for more than 60 per cent of Pakistan’s exports. Garment and textiles exporters also face higher tariffs than the rest of the world.