Hurray for falling trade gap that eased 31 percent over July 2009 and 36 percent on a month-on-month basis. However, let's not get euphoric so fast, as statistics often fail to unveil more important things. And in this case it is the declining export numbers.
Keeping up its downward trend since September 2008, exports were down 3.18 percent last month and the kind of trade policy we all saw last month it seems they will continue falling further. Had it not been for relatively softer world crude oil - by far the country's biggest import - the picture would have been quite different.
In July 2008 the price of crude in international market was hovering between $120 and $130 - almost double the price crude was traded last month. Although, oil is unlikely to top $74 mark in the medium term, according to US Department of Energy, any short term spike - like we saw late last month - can potentially turn this trend around.
Given this inelastic nature of our import demand which is likely to stay that way for the medium term owing to lack of indigenous energy sources, the focus should be on export promotion. And considering that more than half of the country's exports come from textile products - all eyes are now focused on the upcoming textile policy. What should be the way forward for textile industry needs a separate discussion.
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