According to local media, Pakistan’s imports as a percentage of the country’s total gross domestic product or more commonly referred to as the GDP, has soared to approximately 18.7 percent.
Previously, in 2020, according to the world bank collection of development indicators, the imports of goods and services as a percentage of the country’s GDP were reported at 17.45 percent, marking a relative increase in the present year’s imports to GDP ratio.
In contrast, other regional countries such as India and Bangladesh recorded the total imports to GDP ratio at 19.2 percent and 20 percent, respectively, while countries like Turkey, the United Kingdom, United Arab Emirates, and Germany observed even more inflated figures – mostly accounting for over 25 percent of the country’s GDP.
Analysts believe that the ratio of large imports is often exaggerated, taking the focus away from the real problem, which is the lack of exports of the country. Amid dwindling reserves and a moribund economy, Pakistan faces the challenge of an increasing trade deficit. Currently, the country’s trade deficit has crossed the $39 billion figure to mark the highest deficit in 10 months.
It is pertinent to mention that the exports of Pakistan as a percentage of GDP were recorded at 10.03 percent, significantly lower than the import to GDP ratio. In contrast, India registered exports as a percent of GDP at 18.07, almost matching the percentage of exports. Israel, South Korea, Germany, and the United Arab Emirates also have a really high export to GDP ratios at 28, 36.4, 43.4, and 96.8 (latest 2019 report), respectively.
To curtail the rising trade deficit, the government of Pakistan, on the recommendations of the country’s apex trade body, announced a ban on the import of luxury items. The trade body also called for financial reforms, reduction in subsidies, launching of an amnesty scheme, and called on the government to impose an economic emergency.
However, the move to ban the import of luxury items has been dubbed by many as a move solely for optics. Commenting on the recent ban Hammad Azhar, former energy minister, said, “Saving $99 million from a $6500 million/month import bill to avert a self-inflicted economic meltdown. That’s something only this caricature government could come up with.” He further added that the import of luxury items accounts for only 1.5 percent of the country’s total imports. He criticized the bill and maintained that “Such artificial measures do not support the economy.”
حکومت نے جن اشیاء کی درامد پر پاپندی لگئی وہ کُل امپورٹ کا صرف %1.5 حصہ ہیں۔ ایسے مصنوعی اقدامات سے معیشت نہیں سنبھلتی۔ موجودہ بحران کے وجہ منڈیوں کا اِس حکومت پر عدم اعتماد ہے۔ جلد انتخابات کا اعلان نہ ہوا تو معیشت مزید نقصان برداشت نہیں کر پائے گی۔
— Hammad Azhar (@Hammad_Azhar) May 20, 2022
Imports to GDP ratio
Pakistan 🇵🇰 :18.7%
India 🇮🇳: 19.2%
Bangladesh 🇧🇩: 20%
Israel 🇮🇱: 28.2%
Turkey 🇹🇷: 29.3%
UK 🇬🇧: 31.9%
South Korea🇰🇷: 37.7%
We are often wrongly directed that too much imports are our problem, the main problem is lower exports.
— Economy of Pakistan (@Pakistanomy) May 20, 2022