By Abdul Wajid Khan ISLAMABAD, Nov 09 (INP-WealthPK): Diversification and improvement in quality of exportable products can fix Pakistan’s current account deficit problem and put the country on path of sustainable and inclusive economic development. The World Bank in its recent report on Pakistan Development Update titled ‘Reviving Exports’ said that strengthening exports is critical for Pakistan’s sustained economic growth. The report said a more sustainable way of addressing trade deficit challenge is boosting exports. According to latest figures shared by the Ministry of Commerce, during the first four months of the current fiscal year, trade deficit increased more than 103 percent, as the merchandise trade deficit reached $15.525 billion in July-October 2021 from $7.617 billion over the corresponding period of last year. However, the World Bank report said the challenge facing the Pakistan’s trade deficit is not the import bill, but rather low export receipts. It added that Pakistan’s import bill is not particularly large when benchmarked against other countries, nor is its composition tilted towards luxury or even consumer goods. According to percentage of GDP, imports of goods and services stood at 17 percent in 2020, below Bangladesh’s 19 percent, Egypt’s 21 percent, or Vietnam’s 103 percent, all Pakistan’s peers in the size of economy. Merchandise export diversification Pakistan direly needs increasing its focus on merchandise export diversification for revival and strengthening of exports. Although, the government is already taking steps for export diversification with respect to market, but the diversification of products is more imperative to increase the list and verities of exportable goods and services. Adviser to Prime Minister on Commerce Abdul Razak Dawood says Pakistan’s export diversification improved significantly over the last three years, which was the only way to jack up exports. He says Pakistan’s exports of traditional items to non-traditional markets increased by 60 percent during the same period. The World Bank noted that merchandise export diversification has been elusive as Pakistan has struggled to diversify its exports, falling behind the rest of the world, in terms of both products and destinations. At the product level, Pakistan’s merchandise export bundle, which is four-fifths of total exports, has not changed substantially in the past decade. Textile and apparel account for almost 60 percent, while the animal, vegetable and foodstuff sectors combined account for 20 percent. Indeed, the number of product varieties exported by Pakistan fell over the past decade, from an average of 3,167 in 2007-09, to an average of 2,894 in 2017-19. This implies that in the last decade, Pakistan fell in the world ranking of product varieties exported, from the 38th percentile to the 45th percentile. In terms of destinations, despite some progress, Pakistan has improved at a slower pace than its peers. A straightforward way of measuring destination diversification is to count the number of markets reached. By this metric, Pakistan fell from the 22nd percentile in 2007-09 to the 29th percentile in 2017-19. The report also highlighted that the quality of Pakistan’s export products is another indicator of export competitiveness. If exporters specialise in high-quality segments of the market, they create more value added and better paid jobs. There is substantial scope for value addition in agricultural exports through, for example, branding, compliance with standards, and appropriate certification. CPEC provides opportunity After the successful implementation of first phase, the China-Pakistan Economic Corridor (CPEC) has entered its second phase. Now, Pakistan is focusing on boosting industrialisation by strengthening its manufacturing sector. CPEC presents a great opportunity for Pakistan to upgrade its industries by benefiting from the technologies and expertise of China in this field. It is hoped Pakistan will utilise this opportunity and strengthen its exports in future.