Pakistan’s export sector is performing far below its potential, with the World Bank revealing that the country’s exports are $60 billion short of what they could be.

The Bank’s latest report emphasises urgent reforms to strengthen trade competitiveness and revive economic growth.

Pakistan’s export performance has shown a concerning trend, with the World Bank report stating that the share of exports in the country’s GDP has dropped from 16 percent to just 10 percent. The decline is attributed to rigid business regulations, inflexible exchange rates, and costly energy and logistics.

According to the report, Pakistan’s export sector has the capacity to generate significantly higher earnings, but structural barriers are preventing progress.

World Bank recommends key reforms

The World Bank has outlined a set of policy recommendations to enhance Pakistan’s export performance. Chief among them is the adoption of a flexible exchange rate system to improve competitiveness in global markets. The report also stresses the need to simplify business laws and regulatory frameworks, which currently hinder trade expansion.

Another major recommendation is the activation of the Exim Bank of Pakistan. The Bank suggests that the Exim Bank should be provided with new export financing mechanisms to support local exporters and improve access to global markets.

Structural barriers and institutional overlap

The report highlights that over 200 government institutions are currently influencing private sector operations, creating inefficiencies and bureaucratic hurdles. It emphasizes the removal of restrictions that delay the remittance of investors’ profits abroad, a key concern for foreign businesses operating in Pakistan.

In addition, the report points out that high electricity tariffs, weak digital infrastructure, and poor logistics have made production more expensive compared to regional competitors.

According to the World Bank, high tariffs, red tape, and government intervention continue to inflate production costs and limit export growth. The report calls for the full implementation of tariff reforms, modernization of the Federal Board of Revenue (FBR), and customs system upgrades to facilitate smoother trade operations.

To diversify trade, the report also suggests expanding Pakistan’s reach into non-traditional markets, particularly in Africa and Latin America, where new export opportunities remain untapped.