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Pakistan, Turkey promise to boost trade but will it help Islamabad steer out of the current economic crisis?

Pakistan and Turkey commit to boosting bilateral trade

Cash starved Pakistan and its long term ally Turkey have recently renewed their pledge to deepen trade relations. Pakistan Prime Minister Shehbaz Sharif who is in Turkey set a trade target of $5 billion in three years. But the key question — will this help Pakistan come out of its economic crisis?

The two countries agreed on the Strategic Economic Framework (SEF) in February 2020 with the aim to boost the exchange of goods.

That year, which was also marked by widespread Covid 19 induced lockdown across the globe,  Turkey exported $630 million to Pakistan, while it imported goods worth $394 million from Islamabad.

But even 2020 trade figures aside, Pakistan’s exports to Turkey have grown at an annualized rate of a mere 4.01 per cent from $148 million in 1995 to $394 million in 2020. Exports from Turkey however increased at an annualized rate of 8.11 per cent from $89.8 million in 1995 to $630 million in 2020, according to OEC data.

“Any trade pact at this juncture is a welcome move but the case of Pakistan and Turkey is a bit different. Both countries are battling an economic crisis..in this context, it is important to see what roadmap is actually laid to reach the target,” a person studying trade in the Middle East and North Africa (MENA) region told India Narrative.

Despite Turkey’ posting 11 per cent GDP growth rate in 2021, its economy is facing strong headwinds. “Along with the dangerous surge in inflation, which has hit an annual of nearly 50 per cent casting a big shadow of uncertainty over the economy, an array of downsides stands out on the other side of the coin,” news portal Al Monitor said.

Several heads of Turkish companies also met Sharif and evinced interest in investing in Pakistan but analysts said these business meetings are often “cursory in nature.”

Pakistan's business community is in fact strongly in favour of resuming trade with India to cut logistics cost. Many of them have said that resumption of trade with India is the need of the hour.

“The massive border conflict between India and China after the Galwan Valley clash has not impacted trade between the two countries. This reflects maturity of both countries in handling foreign and economic policies,” he said, adding that for Pakistan politics and ideology are the key drivers of the economy.   

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