Formalising trade with India, Iran, and Afghanistan can increase Pakistan’s export manifold. Pakistan is growing into a semi-industrialised economy that relies on manufacturing, agriculture, and remittances. The GDP of Pakistan, which has been growing on an average of 5% a year since 2005, is certainly not enough to keep up with the fast pace of population and growth. Political instability, corruption and poor law enforcement have also worsened the country’s economy by hampering private investments and political aid. However, the GDP of Pakistan has recuperated in the last few years. The GDP in Pakistan expanded 4.71% in 2016 from the previous year. GDP growth rate in Pakistan averaged 4.91% from 1952 until 2016, reaching an all-time high of 10.22% in 1954. It has a record low of -1.80%
Export and Import
As per the Economic Complexity Index (ECI), Pakistan is the 54th largest export economy in the world and the 79th most complex economy. Pakistan exported $20.5 billion and imported $45.9 billion in 2016, resulting in a negative trade balance of $25.5 billion. In 2016, the GDP of Pakistan was $283 billion and its GDP per capita was $5.25 thousand.
However, the top exports of Pakistan are house linens ($2.99 billion), rice ($1.7 billion), non-knit men’s suits ($1.48 billion), non-retail pure cotton yarn ($1.18 billion) and heavy pure woven cotton ($936 million). Its top imports are refined petroleum ($5.74 billion), crude petroleum ($1.98 billion), palm oil ($1.7 billion), petroleum gas ($1.06 billion) and cars ($1 billion). Pakistan’s top export destination among the SAARC countries is Afghanistan with $1.37billion. The top import origins are from India with $1.59 billion. Pakistan’s total import was 6.84% in 2016 and India’s exports to Pakistan in the same year were 1.49%.
Although intra-SAARC trade relations have been healthy between other countries, trade relations between Pakistan and other SAARC members remain low. The bilateral trade between Pakistan and Bangladesh is also not very significant. There hasn’t been any noteworthy action from diplomats or state officials to improve their bilateral relationship. Statistics show that Pakistan’s exports to Bangladesh in 2014 have been around $684 million and Pakistan’s import value remained $54.8 million. Although Pakistan and Nepal have maintained a so-called ‘friendly and cordial’ relationship, there has been no significant steps taken to attain the desired bilateral economic and trade relationship with Pakistan. In 2015-16, imports from Nepal to Pakistan were $0.441 million and exports to Nepal from Pakistan were $0.791 million.
Tensions between India and Pakistan are not new. Imports from Pakistan to India constituted $441 million in fiscal year 2016. However, textiles and clothing constitute the largest share of bilateral trade between the two countries. Agreements have been made to enhance bilateral trade volume to translate friendly relations between Pakistan and Sri Lanka into the economic sphere. However, the recent exports have decreased to $247.145 million in 2015-16 while import from Sri Lanka increased to $74.59 as compared to 57.801 million in 2014-15. According to BCC Persian, because of tense relations and frequent border closures, trade volume between Pakistan and Afghanistan has declined from $3 billion to $500 million in early 2017. This indicates more than an 80% drop in commerce between Afghanistan and Pakistan. Trade between Pakistan and Bhutan can be largely regarded as being insignificant. Pakistan accords importance to its relations with Maldives. A number of Memorandum of Understandings (MOUs) have been signed between the countries on tourism, trade promotion, higher education and human resource capacity building. Cooperation in other sectors includes defense, health, education, sports, fisheries, and culture.
There has been no positive investment from Pakistan in SAARC. Pakistan wanted to see SAARC as an ineffective institution because it feels that an effective and vibrant SAARC would only be inclined to India.
Challenges faced by SAARC countries are poverty, unemployment, inflationary pressure, unfavourable trade balance, high budget deficits and climate change. Terrorism is the most alarming challenge to peace, security and democracy not only in South Asia, but also for the rest of the world. Terrorism along with cross border drug trafficking have created instability and insecurity in the region. Even though every SAARC member pledges to eliminate terrorism in all forms at every summit, countries like Pakistan pursue their own agenda and policies.