Why Pakistan's economy is collapsing under Imran Khan's rule?

 According to the data released by the Statistics Department of Pakistan, in the first quarter of the current financial year, the Foreign Trade Department has faced a hundred percent trade deficit.

The Pakistan Tehreek-e-Insaf (PTI) government had announced a reduction in the country's imports to reduce the trade deficit and the country's current account deficit.

Although the PTI government managed to reduce this deficit slightly in the last financial year, the beginning of the current financial year has seen a huge increase in imports, which is increasing the trade deficit.

According to experts, the increasing trade deficit is a dangerous sign for the national economy as this deficit has a negative impact on the exchange rate by widening the current account deficit, which has a direct negative effect on the value of the rupee against the dollar.


The domestic currency is currently under a lot of pressure against the dollar, one of the main reasons for the increase in the demand for dollars due to the increase in the import bill, while on the other hand the country's exports have seen very little growth.

Experts say that the huge increase in the country's imports in the first quarter of the current financial year and the increasing trade deficit due to it is dangerous. He says that this is a 'red zone' for the country's economy. 

Foreign trade department

According to government data, the trade deficit which was $5.8 billion in the first quarter of last year has increased to $11.6 billion this year.

Imports during the first quarter of this year from July to September amounted to $18.63 billion from $11.2 billion in the same period last year, an increase of over 65 percent.

On the other hand, the country's exports also increased, but this increase is 27 percent. In the first quarter of last year, exports were $5.47 billion, which is $6.9 billion in this year's quarter.

Remember that in the last financial year of the previous government, the country's trade deficit had reached a record level, at that time it had exceeded 37 billion dollars.

The PTI government started reducing it gradually. This deficit was $ 31 billion in the first fiscal year of this government and $ 23 billion in the second financial year.

However, this trend of deficit reduction could not continue and in the third fiscal year ending June 30, 2021 of the current government, this deficit once again reached $ 30 billion and it is increasing continuously.

 What is Pakistan importing?

If we look at the goods imported into Pakistan, it has seen a huge increase in the import of food items, oil products, vehicles and machinery.

If we look at the goods imported in the current financial year, in terms of products, only 66 thousand metric tonnes of sugar has been imported in the month of August, whereas in the month of August last year only 917 metric tonnes of sugar was imported.

Similarly, wheat imports have increased by over 70 per cent, while palm oil imports have increased by 120 per cent.

There has been an increase of 84 percent in the import of pulses and 24% in the import of tea in the country.

On the other hand, oil products grew by about 128 percent. There has been an increase of more than 200 percent in the import of vehicles. Similarly, the import of machinery has also increased. In the first quarter of the current financial year, imports have also increased due to the corona vaccine.

 What is the reason for such increase in imports?

Economist Khurram Shahzad said about the increase in imports that the increase in imports was due to higher consumption of food and energy oil products as well as food items, machinery and vehicles.

He says, "The resources and production at the local level are not enough to meet the demand for these goods, so Pakistan has to import."

Khurram Shahzad said that the second main reason for this is also that the country's exports did not increase in such a way that it could reduce the trade deficit arising from excessive imports.

"One of the reasons for over-consumption is that when sources of income increase, consumption also increases."

He has described consumption as good, but at the same time he also said that if it is met by imported goods, then the country has to bear the loss in the form of trade deficit.

 Economist Dr Farooq Salim, while talking to BBC Urdu about this, said that the increase in the import bill has been due to increase in food items as well as machinery, vehicles and oil products. He also says that the income of Pakistanis has not increased, but they are spending more.

He said that since 2018 till now, there has been a decrease in the per capita income of Pakistanis, which was $ 1482 at that time, now it has come down to $ 1190.

Dr Farooq says that the lack of growth in exports is the main reason for the increasing trade deficit. He said that the government had celebrated exports of $ 31 billion in the last financial year, but in the financial year 2013-14, the same exports happened and after that it started declining.

He says, "If we look at the then and today's value of the dollar, it means that Pakistan has not made any development in exports."

He said, “If we are importing even palm oil, wheat and sugar, it means that the trade deficit is going to widen. Along with this, the textile sector is being encouraged to import more machinery which every few years. This is a temporary solution, but it is not a permanent solution.

 He also rejected the notion that a large proportion of food imported into Pakistan is being smuggled into Afghanistan, leading to additional imports. He further said that now people in Afghanistan do not have enough purchasing power to buy the expensive things smuggled.

Dr Farooq said that at present Pakistan is benefiting due to remittance (money coming from outside), otherwise the speed with which the trade deficit is increasing can greatly spoil the current account deficit of Pakistan.

He said that the State Bank of Pakistan has imposed 100 percent cash margin on many imported products, but despite this the import cannot be stopped because even if the price is high, the consumption of essential commodities will continue.

When Razzaq Dawood, Adviser on Trade Affairs to the Prime Minister of Pakistan was contacted to inquire about his stand on the widening trade deficit due to increase in imports, he said that why imports increased is a complex issue and he is currently in the meeting, He will contact himself later, but he did not contact again in this regard.

Dr Farooq Saleem described the country's growing trade deficit as a 'red zone' and said that due to this the country gets caught in a 'vicious cycle' as the increasing trade deficit widens the current account deficit, which causes the exchange rate and currency to fall. and poverty increases due to work level of income in the country.

He said, "All the claims of the PTI government to reduce the trade deficit are only on social media and this may be their wish, but in practice they do not have any strong strategy. This can be judged by looking at the results. It is about how successful the government is on which front and these results are telling that this government does not have any strategy to reduce the trade deficit.

 He said that if the trade deficit is about $ 12 billion in just three months, then it can be estimated how much the trade deficit can be at the end of the year.

Khurram Shahzad said that if the trade deficit remains three percent of GDP, then it is not a matter of concern, because for growth and consumption in the economy, imports have to be done, but if it starts increasing to four percent and more then this country Signs of danger to the economy.

Khurram Shahzad said that since drastic reforms could not be implemented in the country to improve the economy and increase local production, the trade deficit is widening due to imports.