Pakistan’s bilateral costs are relatively higher than those of other developing economies. The country’s high real exchange rate has proven to be harmful for exports. In contrast competing economies have devalued their currency or allowed their exchange rate to depreciate.

For example, between January 2014 and December 2015, the Indian rupee and Chinese yuan fell by approximately seven per cent, the Turkish lira by 26 per cent and the Vietnamese dong by 76 per cent. Between 2013 and 2015, Pakistan’s garment exports to the EU increased by ten per cent compared to Bangladesh’s and India’s 13 per cent and 17 per cent respectively.

Pakistan also has an opportunity to expand its share of agriculture exports. China imported 160 billion dollars worth of agricultural products in 2015. However, Pakistan’s share was less than 0.5 per cent. The higher demand for garments in China has created opportunities for countries like Pakistan to get a bigger share. Rising labor costs in China, a growing demand for garments in major Asian economies, and the GSP Plus status have created new opportunities for Pakistan to increase textile and garment exports. By 2019 China is expected to be the biggest apparel market creating space for Pakistan to benefit from the developments.