Question

discuss the effect of changing trends in exports and imports on Pakistan’s balance of trade and economy (for the last two decades only

Answer 1

Answer:

An import means getting goods into one country from another country in an appropriate method, typically for use in trade. Imports of goods and services are provided to domestic consumers by foreign producers. Imports play vital role in enhancing exports, these imports could be in the form of raw materials or machineries; both are used in the manufacturing sector. It is expected that imports of consumer goods have direct contemporaneous association with exports, while imports of capital goods affect exports with two period lags because machinery imported by the producers first setup and then start production, therefore, it starts impacting exports.

(or)

credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deafect if it's imports are more than in exports; the opposite scenerio is a trade surplus..........imports and exports can include physical goods and intangible services.

Answer 2

Answer:

The effect of changing trends in exports and imports on Pakistan’s balance of trade and economy

Explanation:

The current economic crisis is mainly attributed to the short-sighted policy decision of Pakistan, leading to extensive spending on non-developmental and economically unviable projects. Its problems have been compounded by economic mismanagement and financing of redundant infrastructure projects such as the Gwadar-Kashgar railway line project through long-term debt instruments and largely relying on external borrowing rather than domestic institutions. The roll-out of the China-Pakistan Economic Corridor (CPEC) increased the debt burden, opening doors to ever-increasing foreign debt. Notably, the CPEC created a Chinese debt of US$64 billion to Pakistan, with an original value of US$47 billion in 2014.

The continuous depreciation of the Pakistani rupee against the US dollar has contributed to the increase in external debt. Lower ranking by international rating agencies and gray listing of Pakistan in the Financial Action Task Force (FATF) as well as declining confidence kept foreign investors away. State Bank of Pakistan data shows that in the last 10 years, foreign direct investment (FDI) inflows into Pakistan have never exceeded 1 percent of GDP. A vicious cycle of taking loans and repaying old ones has pushed Pakistan into the infamous 'debt trap'. Furthermore, due to the reluctance of the international community to lend to Pakistan, the country was forced to primarily resort to China and Saudi Arabia and thus was vulnerable to their complicated terms.

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