ISLAMABAD: In the face of mounting economic challenges, Pakistan needs to adopt a robust strategy centred on strengthening the foreign exchange reserves through sustained export growth. As the country grapples with economic uncertainty, this strategy is seen as a crucial pathway to financial stability and long-term economic resilience, reports Media.
“Pakistan is at a critical juncture in economic development, facing the consequences of prolonged reliance on import substitution to sustain its current account balance. This strategy, once considered a prudent approach, has led to repeated economic downturns, highlighting the urgent need for a shift towards export-led growth,” shared an expert from the Ministry of Planning Development and Special Initiatives with Media on the condition of anonymity.
“At first, import substitution was viewed as a strategic way to decrease reliance on foreign products and safeguard domestic industries. Nevertheless, this approach has been shown to be unfeasible for Pakistan. It has established a situation in which the foreign currency reserves are continuously burdened by an increasing import bill, resulting in excessive dependency on foreign loans and deposits to cover budget shortfalls.
“Therefore, to escape this cycle, Pakistan is now redirecting its focus towards bolstering exports, attracting foreign direct investment (FDI), and optimising remittances. Among these, export enhancement is seen as the cornerstone of Pakistan’s economic revival. By prioritising exports, the country can generate the essential foreign exchange needed to ease pressure on reserves and foster sustainable economic growth.
“The key to Pakistan’s strategy is revitalising its export sectors, particularly textiles, agriculture, and information technology. The textile industry, long the backbone of Pakistan’s export economy, should be targeted for modernisation and increased productivity. The government needs to incentivise the sector by providing subsidies on raw materials, reducing energy costs, and supporting technology upgrades. These measures aim to make Pakistani textiles more competitive in the global market, particularly in light of the growing competition from regional players like Bangladesh,” Uzma Zia, Senior Research Economist at the Pakistan Institute of Development Economics (PIDE), told Media.
She said the IT sector was emerging as a new frontier for exports. With a growing pool of skilled IT professionals, Pakistan is poised to become a key player in the global tech industry. The government is fostering an enabling environment for IT startups, offering tax incentives, and promoting international partnerships to increase software exports and attract foreign clients.
Recognising this, the government should introduce measures aimed at creating a more conducive environment for such transformation.
However, while the strategy is promising, several challenges remain. Global economic conditions, geopolitical tensions, and internal political instability could hamper efforts to increase exports. Additionally, Pakistan must address structural issues such as energy shortages, outdated infrastructure, and a complex regulatory environment to fully realise its export potential. –INP
