Balance of Payment Crisis, Policy Options and Its Impact on Pakistan's Economy

This study has examined complex relationship between Balance of payment, trade deficit, inflation and exports. GDP is dependent variable while trade deficit, Inflation, balance of payment and exports are independent variables. The study has used yearly time series data spanning from 1990 to 2022 and employed different statistical techniques such as descriptive statistics, correlation Matrix, ADF Test, ARDL, Error Correction Model and Granger Causality test. The results of the ARDL model show that exports, inflation and trade deficit have positive association with GDP while balance of payment has negative relationship with it in the long run.The study suggests that the Government of Pakistan should take corrective measures to reduce balance of payment as it is hurting economic growth.