The lead economist for the World Bank, Sanjay Kathuria on Wednesday said the current level of Pakistan’s trade with South Asia of only $23 billion per year was low against the potential of around $67 billion which could be tapped by increasing business ties with the regional countries.
“Pakistan’s trade with South Asia accounts for only 8 per cent of its global trade and the country can increase its exports to regional countries by eight times,” he said while talking to journalists here at the World Bank office on Wednesday.
Sanjay Kathuria has authored the recently launched World Bank report titled “Glass Half Full: The Promise of Regional Trade in South Asia”, which dilates on the measures which Pakistan should take to realize the trading potential in South Asia.
Sanjay said Pakistan’s actual trade with South Asia was $5.1 billion against the potential of over $39 billion per year.
With the rest of the world, the total trade was $67.9 billion, he added.
In order to achieve the real potential of regional trade, Sanjay suggested to remove the unnecessary non-tariff barriers within the region, increase people to people contacts, improve road and air connectivity, and liberalize trade within South Asia.
On the occasion, World Bank Country Director for Pakistan, Illango Patchamuthu said “Pakistan is sitting on huge trade potential that remains largely untapped”.
“A favourable trading regime that reduces the high costs and removes barriers can boost investment opportunities that are critically required for accelerating growth in the country.
“Meanwhile Director Macroeconomic Trade and Investment, WB, Caroline Freund said Pakistan’s economy showed a significant improvement during the previous year when the total GDP growth rate was recorded at 11-years high of 5.8 per cent.
However, she said that was mainly consumption-driven growth, but Pakistan really needs export promotion policies to ensure sustainable economic growth.
With respect to the currency exchange rate, Caroline termed the undervalued currency as a part of anti-export policies saying that if a currency of any country is undervalued, the imports would get cheaper and the exports would get costlier and would ultimately discourage the exporters.
To a question, she said the appreciation of any country’s currency by 10 per cent would mean the contraction of exports by 5.7 per cent.
She said the value of the exchange rate should be determined by the real market trend by balancing the other implications of devaluation including inflation, increasing debts, and increased cost of business.
Meanwhile, a press statement issued by the World Bank said while Pakistan and India collectively represent 88 per cent of South Asia’s Gross Domestic Product (GDP), trade between the two countries is only valued at a little over $2 billion which could be as high as $37 billion.
Regional trade can create many more jobs and make the country prosperous if trade barriers with South Asia especially between India and Pakistan are removed.
Pakistan’s trade with South Asia accounts for only 8 per cent of its global trade, despite the region being the world’s fastest growing.