Cambridge O Level Pakistan Studies: Trade (2059)

Trade is Section 6 of Paper 2 in Cambridge O Level Pakistan Studies 2059. It asks what Pakistan sells to and buys from the world, how that mix has changed, what GNP and GDP mean, why the balance of trade is usually in deficit, who Pakistan’s main partners are, and what helps or holds back its trade. Questions are often built on a bar chart or table of exports and imports, so data interpretation is central.

How is Trade examined in 2059 Paper 2?

You answer three 25-mark questions out of five in 1 hour 30 minutes. A Trade question usually gives a graph of export values by product, a pie chart of partners or a table of exports and imports over several years. Early parts ask you to read and calculate from it; later parts ask you to explain trends; part (d) asks you to analyse or evaluate, for example whether Pakistan can increase its share of world trade. Trade links to Section 4 (rice, cotton, fruit), Section 5 (textiles, sports goods, surgical instruments) and Section 3 (fuel imports).

Syllabus coverage

CAMBRIDGE O LEVEL PAKISTAN STUDIES 2059, 2026 — PAPER 2, SECTION 6: TRADE

• 6(a) Major exports and imports: name the main exports and imports; describe recent changes in their types, amounts and value; know the meaning of GNP and GDP and the difference between them; explain how changing export and import trends affect the balance of trade and the economy
• 6(b) Pakistan’s trading partners: name and locate the main partners and the goods exchanged with each; the factors that promote or hinder trade, and why a developing country finds it hard to keep or raise its share; trading blocs, trade barriers and currency exchange rates

What does Pakistan export and import?

The values below are rounded and refer to the fiscal year 2023–24 (July to June), using Pakistan Bureau of Statistics trade data (exports US$30.6 billion, imports US$54.7 billion, deficit US$24.1 billion) and State Bank remittance data; State Bank balance-of-payments totals differ slightly. Learn the pattern; the exact numbers move each year.

	Approximate value (2023–24)	Main items
Goods exports	About US$31 billion	Textile group (knitwear, bed linen, ready-made garments, cotton cloth, yarn, towels) a little over half; rice (a record of nearly US$4 billion); leather goods; surgical instruments and sports goods; fruit and vegetables; fish; cement; chemicals
Goods imports	About US$55 billion	Petroleum products, crude oil and LNG; machinery and electrical goods; palm oil; chemicals and plastics; iron and steel; medicines; vehicles and parts; tea; pulses
Trade balance	Deficit of roughly US$24 billion	Imports cost far more than exports earn

How has the mix changed?

• From raw materials to processed goods. In the 1950s Pakistan’s exports were mainly raw cotton, and jute from East Pakistan. Today raw cotton exports are small; most cotton leaves as yarn, cloth and finished garments, which add value.
• Rice has grown. Basmati and non-basmati rice exports reached a record value in 2023–24 after India restricted some of its own rice exports, showing how a competitor’s policy can change Pakistan’s earnings.
• Fuel dominates imports. The import bill swings with world oil and gas prices. It jumped in 2021–22 when world prices rose, then fell in 2022–23 when the government restricted imports to protect foreign-exchange reserves.
• New growth areas: information technology services (counted in services trade, roughly US$3 billion), surgical instruments, pharmaceuticals and seafood.

What are GDP and GNP, and how do they differ?

Gross domestic product (GDP) is the total value of all goods and services produced inside Pakistan in a year, whoever owns the business. Gross national product (GNP) is the value produced by Pakistan’s residents and companies wherever they are: it equals GDP plus income earned abroad by Pakistanis (such as profits and interest), minus income paid to foreign owners of businesses in Pakistan (such as profits sent home by foreign firms). The difference is “net income from abroad”. Both are often divided by population to give a per-person figure for comparing living standards.

How do trade trends affect the balance of trade and the economy?

The balance of trade is the value of exports of goods minus the value of imports of goods. When imports exceed exports there is a deficit, which Pakistan has run almost every year.

A widening deficit means:

1. More foreign currency is needed than exports earn, so reserves fall.
2. The gap is filled by remittances from overseas Pakistanis (about US$30 billion in 2023–24), loans, and sometimes help from the IMF or friendly countries.
3. Pressure on reserves weakens the rupee, which makes fuel and machinery imports dearer and raises inflation.
4. Repaying loans takes money away from schools, health and development projects.

Rising exports of higher value-added goods narrow the gap, create jobs and allow imports of the machinery industry needs.

Who are Pakistan’s main trading partners?

Partner	Pakistan mainly exports	Pakistan mainly imports
United States	Knitwear, bed linen, garments, towels	Cotton, soybeans, machinery, scrap
China	Cotton yarn, copper, rice, seafood, sesame	Machinery, electrical goods, chemicals, steel, textiles inputs, solar panels
United Arab Emirates	Rice, meat, fruit, textiles	Petroleum products, re-exported goods
United Kingdom, Germany, Netherlands, Spain	Garments, bed linen, leather, sports goods	Machinery, vehicles, chemicals
Saudi Arabia, Kuwait, Qatar	Rice, textiles, food	Crude oil, petroleum products, LNG (Qatar)
Indonesia and Malaysia	Rice, textiles	Palm oil
Afghanistan	Food, cement, medicines, manufactured goods	Coal, fruit, vegetables, cotton

On a world map, be able to locate these countries and say which goods flow in which direction. The United States has generally been the largest single export market, while China is the largest source of imports.

What promotes and what hinders trade?

Promoting factors

• Trading agreements and blocs: the EU’s GSP+ scheme (from 2014) lets most Pakistani exports enter the European Union tariff-free, conditional on human-rights and labour conventions; the China–Pakistan Free Trade Agreement (in force from 2007, extended in a second phase); the South Asian Free Trade Area (SAFTA); the Economic Cooperation Organization (ECO) with Iran, Turkey and Central Asia.
• Location: Karachi, Port Qasim and Gwadar on the Arabian Sea, close to Gulf markets, and land routes to China and Afghanistan.
• A weaker rupee can make Pakistani goods cheaper abroad.

Hindering factors

• Narrow export base: heavy reliance on textiles and rice exposes earnings to falls in world prices, poor cotton harvests and floods.
• Competition from Bangladesh, Vietnam, India and China, which produce similar goods at scale.
• Trade barriers in richer markets: tariffs, quotas, and strict quality, safety and labelling standards that small firms struggle to meet.
• High production costs: expensive and unreliable power and gas, and slow port clearance.
• Exchange-rate swings: the rupee fell from roughly Rs 160 to the US dollar in mid-2021 to around Rs 280 by 2024, raising the cost of imported inputs that exporters themselves rely on.
• Political tension with neighbours, which limits trade with India in particular.

Why is it hard for a developing country to raise its share of world trade?

Pakistan exports mostly low-to-medium value goods whose prices are set by world markets, while it imports high-value machinery and fuel whose prices it cannot control. Its firms are often small, short of capital and technology, and face standards and branding they cannot easily meet. Rich countries’ tariffs on processed goods can be higher than on raw materials, which discourages adding value. Without a broader range of products, Pakistan’s share of world exports has stayed well under one per cent.

Frequently asked questions

What is the difference between the balance of trade and the balance of payments? The balance of trade covers only exports and imports of goods. The balance of payments is wider and also includes services, remittances, investment and loans.

Why do remittances matter for trade? They bring in foreign currency that helps pay for imports, so they reduce the pressure that a trade deficit puts on reserves and the rupee.

What is GSP+? A European Union scheme that removes tariffs on most exports from qualifying developing countries that ratify and implement international conventions. Pakistan has used it since 2014.

Does a weak rupee help or hurt Pakistan? Both. Exports become cheaper for foreign buyers, but imported fuel, machinery and raw materials become more expensive, which raises costs and inflation.

Related resources

• Trade revision notes
• Trade practice questions
• Transport and Telecommunications study guide
• Industrial Development study guide

Official syllabus

Cambridge Assessment International Education, Cambridge O Level Pakistan Studies 2059 syllabus for examination in 2026, Paper 2 Section 6 Trade: https://www.cambridgeinternational.org/Images/697282-2026-syllabus.pdf (checked 2026-11-08). Trade values are rounded figures for 2023–24; check the Pakistan Economic Survey and State Bank of Pakistan for current data.