Factors that Impact Pakistan’s Exports: An Empirical Analysis

Pakistan’s exports have remained stagnant despite multiple exchange-rate depreciations. Empirical evidence from product-level data between 2003 and 2024 indicates that changes in the real effective exchange rate and energy tariffs have had limited effects on exports, whereas export diversification and foreign demand are key drivers of export growth. Lower import tariffs primarily boost non-textile and ICT exports and should be phased in carefully—focusing on capital and inputs used in export sectors—to prevent balance of payments issues. To promote sustainable export growth, Pakistan needs to shift from price-driven policies to a capability oriented approach that emphasizes innovation and diversification into higher-value, more complex products.