TERMS OF TRADE OF PAKISTAN

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This graph showed the impact of decreased prices of international prices of commodity and oil country’s terms of trade increases . This graph showed the impact of decreased prices of international prices of commodity and oil. country’s terms of trade aggregated to 54.9 during July‐March 2009‐10 as compared to 56.3 of July‐March 2008‐09 The terms of trade measures the rate of exchange of one good or service for another when two countries trade with each other.

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SUMMARY OF BALANCE OF PAYMENTS Pakistan’s Current Account Deficit (CAD) narrowed down by $3.06 billion in July‐April 2009‐10 as against $ 8.98 billion last year This decline in CAD during 2010 was contributed by the improvement in trade, services, income & current transfers during the period.

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REASONS TO DECLINE IN CURRENT A/C BALANCE: Fall in payments on account of repatriation of dividends, interest on debt, freight on merchandise imports & lower outflows from foreign exchange companies. DECLINE IN FINACIAL A/C: Decline in financial account surplus, which emerged in 2008, continued in July‐April 2009-10 the deficit in the financial account is attributed to lower loan inflows, foreign investors’ risk & amid global crisis The major sectors that recorded decline included communication, financial business and oil & gas exploration.

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Decline in trade deficit is due mainly to a fall in imports complimented by overall improvement in Exports during July‐April 2009‐10. The improvement in income account is based on a decline in investment income outflows & fall in net interest payments .The increase in services exports is mainly led by communication, financial, government and other business services. Lower passage & freight earnings and reduced local operations of foreign transport companies remained the key factors behind the overall decline in the transportation services exports . CAMPARISON

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MAJOR REASONS OF DECLINE IN FDI: FDI decline due to global and economic crises. This crisis reduce the companies investment plans because of these internal factor like higher uncertainty , risk aversion behavior falling profitability rate Energy crisis & Law &order situation FDI also decline along with external factors of global economic slowdown

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REMITTANCE Growth in world remittances during 2009 declined by 6.7 percent on the back of global financial crisis specifically, remittances flow to Asian countries remained stronger during the period under review. They are two reasons which increase remittances in Pakistan. The crackdown on illegal fund transfer and asset prices crises in Dubai due to which investment was diverted to Pakistan in the form of remittances by Pakistani migrants who lost their jobs in Dubai, and b) increased outreach of banks having arrangements with overseas entities.

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