Charter of the Economy The level of exports has plummeted from 14.3 percent of the GDP in 2004-05 to 8.5 percent of the GDP in 2020-21. The result has been mushroom growth in the trade deficit from only 1.1 percent of the GDP in 1999-2000 to an unbelievably large deficit of 11 percent of the GDP in 2017-18. The large and growing deficits have partly been financed by home remittances but there has also been resort to large and growing external borrowing to cover these deficits. It is not surprising that the external debt of Pakistan now stands at over$115 billion, equivalent to 41 percent of the GDP. The argument can, of course, be put forward that the growth in imports has been enhanced by a rise in international prices, especially of oil. Therefore, the ratio of imports to GDP has also been derived in constant prices of 2005-06 to determine the relative growth in the volume of imports and in the real GDP. Estimates are presented in Table 17.2 along with the exports to GDP ratio. Table 17.2: Trend in The Volume of Imports, Exports and The Trade Deficit to real GDP ratios (At constant Prices of 2005-06)(% of GDP) Imports* Exports* Trade Deficit 1999-2000 16.5 10.1-6.4 2004-05 19.2 13.6-5.6 2009-10 17.2 13.7-3.5 2014-15 13.8 10.3-3.5 2017-18 19.3 9.6-9.7 2020-21 20.8 11.4-9.4 *Goods and services Source: PES The estimates in Table 17.2 reveal a similar trend as in Table 17.1, though somewhat less pronounced. Imports were at a trough of 13.8 percent of the GDP in 2014-15 but have risen since then to 20.8 percent of the GDP. Consequently, the trade deficit in volume terms has risen from 3.5 percent of the GDP to 9.4percent of the GDP in 2020-21. There is no doubt that Pakistan historically had a high marginal propensity to import. A comparison is made with Bangladesh and India to see if this is relatively the case. The elasticity of imports with respect to GDP growth is indeed significantly higher at 1.2 in Pakistan as compared to 0.8 in India and just under 1 in Bangladesh. 17.2. Changes in the Composition of Imports The annual growth rates in value and volume of major imports of Pakistan from 1999-2000 to 2018-19 are shown in Charts 17.1 and 17.2. 166