Under changed architecture, economy endures trade deficit in goods and services

Successive govts have ignored traditional economic fundamentals such as high aggregate demand, real exchange rate

With high interest rate and surplus, income-GDP growth falls, tax collection shrinks while taxes are increased

Financial position of developing states remains fragile; they can dip into crisis as confidence of lender drops

IMF programmes provide financing lifeline; remittances and import controls shape current account

SBP conducts sterilisation operation by selling govt securities to mop up excess liquidity in banking system

High interest rates, import compression and regressive taxation leading to low growth, unemployment

In emerging situation, challenge for govt is to jump-start economy, create jobs

Public system stabilises wild swings in food prices, but leaving it to market will be politically costly

Stabilisation measures are taken to control excess demand mainly through high policy rate, austerity drive