The current increase in trade deficit will drag our economy towards major downturn which is already in doldrums due to various core issues that need to be addressed by the Government on urgent basis.
Asad Farid, Acting President, Islamabad Chamber of Commerce and Industry (ICCI) expressed deep concern over the increasing trend in trade deficit. He said that the country could not afford rise in trade deficit for long term with the current level of foreign exchange reserves.
He was responding to the reports that trade deficit has increased by 36.3 percent and crossed the benchmark of $21billion during fiscal year 2011-12 as compared to $15.60 billion in the previous corresponding period.
ICCI Acting President said that our export oriented industries have failed to maintain export target due to severe energy shortage and our exports were on decline and recorded at $23.64 billion compared with $24.81billion in the same period last year, depicting a decline of 4.71 percent which would also put the country in a balance of payments crisis.
He said that the higher trade deficit leads to outflow of capital resources from the country and increases economic dependency. To control over the trade deficit, Government should improve the competitiveness of the domestic industries by ensuring uninterrupted power supply which would also improve the exports of the industrial units.
Asad Farid said that widening trade deficit would bring pressure on the current account deficit, which could ultimately press the rupee value down and this will further deteriorate the situation.
ICCI Acting President called upon the Government to take urgent measures to bring some stability in rupee value against dollar so that rapid increase in import bill could be controlled as it was the major cause of widening trade deficit. He cited the example of China, who was continuously trying to maintain its trade balance by controlling value of its currency.
