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DIFFERENCE BETWEEN THE EXPORTS AND IMPORTS

50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 EXPORTS IMPORTS

YEAR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

EXCHANGE RATE 53.65 61.93 59.72 57.75 58.26 59.51 60.27 60.74 70.41 81.71 85.19

INFLATION 3.584 4.41 2.504 3.102 4.568 9.276 7.921 7.771 11.998 20.775 11.73

TRADE BALANCE -87580 -84964 -70065 -59477 -165583 -367644 -719214 -813000 -1270598 -1339852 -993517

So it has negative impact on trade balance and the imports were increased and balance was reached to 813000. In year 2005 inflation is doubled approximately. As inflation increases there should have the negative impact on trade balance but the figures have an opposite picture. In year 2003 the inflation rate is 3. it should have negative impact on balance of trade according to the trend.26 to RS85. So the trade balance is negative but effective than last year. This opposite trend is just because of reduction in inflation.s 53.41% which is more than last year.568% to 9.IMPACT OF INFLATION ON TRADE BALANCE Inflation has negative impact on trade if the inflation increases the import become also increases and the exports become decreases. From year 2007 to 2010 the inflation increased from 7. Same is the case with Pakistan. In year 2000 the inflation rate is 3. The trade balance shows that the imports of Pakistan increased by huge amount of 97%.S dollar was R. This was just because of inflation changes with huge amount. Same as in year 2001 there is positive impact on trade balance. It should have positive impact on balance of trade. In year 2010 inflation decreased approximately 100% which has positive impact on trade balance and the balance was reached to –993517. As the money valued depreciates the exports should increases and the imports decreases. This means there should be positive impact on balance of trade but the results are different. which was impacted negatively.584% and the trade balance is -87580. IMPACT OF EXCHANGE RATES ON TRADE BALANCE Impact of exchange rates is opposite to the inflation.504% which is lesser than last year. Because of inflation the prices increases of local products people prefer the imports because they can purchase at low prices same product from outside the country. the negative impact is approximately 110% as compared to last year.65. Only 2010 have positive impact of depreciation of money value. In year 2002 exports increases.102% which is more than last year. But in year 2004 due to increase in inflation rate the impact is according to the trend which is negative. And the trade balance reached to –1339852. . In year 2002 inflation rate 2. But it was opposite to the trend. In year 2006 inflation decreased but the impact on trade balance is not according to the trend.276%.775% which affected hugely to trade balance.19. Increases from 4. In years 2002-03 money value appreciates. it should have negative impact on trade balance. In year 2001 the inflation rate is 4.771% to 20. Due to depreciation of money the exports increased as compare to last year. From year 2004 to 2010 the money value regularly depreciates from RS58. In year 2007 inflation is approximately same as year 2006. In year 2000 the exchange rate of Pakistani rupee with U. In the year 2001 the money value depreciated and the exchange rated become increased. This is just because of inflation. although inflation is lesser than last year but the impact is negative. It should have positive impact on trade balances.