Reasons of Trade Gap/Deficit

[alishan]

Hello Guys!
Pakistan,s expected trade deficit was almost 6 Billion Dollar.
Exports14 billion dollar.
Imports20 Billion Dollar.

Well now the trade gap has infavourably incresed to record highs of 7.3 Billion Dollar.
I would like you guys to discuss some of the reasons.If you guys could well explain.
Thanx
Alishan from Hailey College of Commerce.

[Nauman]

If you want to be an eternal optimist then you can justify it by saying that Pakistan is developing really fast and as a result of development there is industrialization going on, existing industries and improving their infrastructure and exapanding their facilities and thus importing alot of capital goods as a result from which imports have gone up, since expansion is taking place now it would take time for exports to catch up, though only time will tell wether this is true or not.

On the other hand if you want to be pessemistic about it then you can say that exports are not growing as quickly as the imports are, your populations is still out of control and as a result the domestic production is insufficient to take care of demand by the population and thus the reason for rapid increase in imports. Secondly our manufacturing sector is still not strong enough to sustain high level of imports majority of our imports stem from agriculture industry and value for those goods is not very high anyways so a large increase in total quantity of exports doesnt necesserily mean that your export figure would be impressive.

Though to be realistic I think we lie in between the two scenarios above more inclined towards the later one.

[smurfyazhar]

the main reson for this trade deficit is the high increase in the oil prices.