China has emerged as Pakistan’s largest trading partner replacing the US and is being closely followed by the UAE. The US has slipped to third position on the list of the top ten trading partners.
Germany and the UK occupy eighth and 10th slots respectively and Japan is no more on the ten top list. The latest rankings based on the FY11 statistics indicate that Pakistan is doing much more trade within Asia and its reliance on American and European markets is on the decline.
Asia rescued much of the world from the global recession of 2008-09—thanks largely to the huge market provided by the phenomenal economic growth in China and India. This economic resilience brought about a shift in the direction of Pakistan’s exports and imports.
Emergence of the new rich in China and expansion in middle-income consumers in the Middle Eastearn countries opened up new opportunities for Pakistan to boost trade with all these nations. Moreover, the trade gravity played its part in redirecting our external trade towards South and East Asia including Malaysia and Indonesia.
Small wonder then, that in the last fiscal year seven out of the top ten largest trading partners of Pakistan were all Asians—China, the UAE, Saudi Arabia, Kuwait, Malaysia, Afghanistan and India. And all of them except Saudi Arabia and India showed an improvement in their respective rankings, in a small span of three years.
“Interestingly whereas recession in the US and troubled political relationship between Islamabad and Washington affected growth of bilateral trade, the surge in the US troops in Kabul aimed at winding up the military operation there increased our exports to Afghanistan,” according to a senior official of Trade Development Authority of Pakistan (TDAP). That explains, at least in part, why Afghanistan’s seventh slot among our largest trading partners in FY11.
Our exports to Kabul totaled $2.3 billion in FY11. This growth trend is continuing and in the first five months of this fiscal year, exports to Afghanistan have touched a billion dollars mark.
Movement in intra-Saarc merchandise exports is gathering pace and TDAP officials say our exports to Bangladesh is growing so fast that if Pakistan-India trade relations do not improve in near future, New Delhi would be replaced by Dhaka, and not by any other country, on the list of the ten largest trading partners of Pakistan. Whereas import from Bangladesh remain static below a hundred million dollars, exports to Bangladeshi markets grew more than 100 per cent to $1 billion in last fiscal year.
Business leaders say Pakistan’s top bilateral trade partners are changing not just because of economic miracle of China and overall better average economic growth in Asia than in America and in Europe. “Increase in imports from China, for example, is also related to the Chinese investment projects in Pakistan part of which are scaling down American influence,” said a former president of the Federation of Pakistan Chambers of Commerce and Industry.
“Interestingly, however, our imports from India are growing rapidly because Pakistani authorities have removed almost all non-tariff barriers on Indian exports without caring for the principle of reciprocity.”
India and China are two of the six countries on the list of the top ten trading partners with whom Pakistan runs trade deficits.
The other four are the UAE, Saudi Arabia, Kuwait and Malaysia. Whereas Pakistan imports large amounts of costly fuel oil from the first three countries, it runs trade deficit with Malaysia primarily due to huge import bills of palm oil.
“Apart from low transport cost, the growing imports from the Asian region is attributed to the exportable surplus there,” says Mr. Tariq Sayeed, a former President, FPCCI.“Pakistan has the immense potential to improve its bilateral trade relations in the Asian region and particularly with the Saarc member countries also because of similarities of consumer tastes and trading priorities.”
With four countries out of the ten largest trading partners, Pakistan boasts of a trade surplus. These are the US, Afghanistan, Germany and the UK. “Whereas it is easier to retain Afghanistan as a major export market and it is encouraging that Bangladesh has emerged as a billion-dollar market for our products, the US, Germany, the UK and other European countries are equally important for sustained growth in overall exports,” remarked chairman of Pakistan Bedwear Exporters Association Mr. Shabbir Ahmad. He and many other exporters believe that normalisation of political relationship with the US and continuing of efforts to win trade concessions in European Union are required for keeping exports on a high growth trajectory.