The government’s economic team’s hard work had indeed yielded some fruit, as the economy has started moving towards the path of stability, but the Prime Minister is perhaps patting his team on the back a little prematurely. There is still a long way to go before Pakistan Tehreek-i-Insaf (PTI) can claim that it has ‘fixed’ the economy. Prices for most goods are still sky high – and not only due to hoarding as claimed by the Prime Minister. High levels of indirect taxes and increased costs of production have led to an overall rise in inflation in locally produced products, while increased taxes on imports and the devaluation of the rupee (which has more or less stabilised) obviously lead to a rise in the cost of imports.
However, this last factor has led to a marked decrease in Pakistan’s trade deficit –a whopping 34% – with the current rate of $7.7 billion finally reaching the globally accepted levels, and for this the government should be commended. But all good news related to the economy is currently a mixed bag, as the very slim increase of $0.27 billion in exports tells us. A 3.84% increase in exports is not nearly enough to rejuvenate the economy and provide it with the necessary injection of funds it needs. While the government has indeed managed to clamp down on imports as promised, it must work harder to increase Pakistan’s exports in the international market.
The decrease in imports and the government’s taxation measures have also adversely affected business. Pakistan’s domestic production would normally be a substitute for the imports, but given our failure to increase local productive capacity, this is not currently happening. The government must start moving towards phase two of rejuvenating the economy, which might necessitate abandoning the austerity measures and increasing government spending in a bid to boost economic activity in the country.
There are other indicators that have posted a poor showing as well. Pakistan’s external debts and liabilities continue to increase, although as a percentage of GDP they have declined. The scariest aspect of Pakistan’s debt however, is our debt-servicing requirement, which has now crossed the $3 billion mark. What all of this tells us is that, Pakistan’s economy is looking much better than it was this time last year, but it is not even close to being out of the doldrums yet. More is needed from the government and it is hoped that the country’s economic team is up to the task.