Hope springs eternal

Data on exports that was released on Tuesday indicating growth

There is some slightly better news on the economic front which suggests that perhaps the worst may be over. Data on exports that was released on Tuesday, September 11 show that exports are continuing to grow, with merchandise exports posting an 8 per cent increase in August compared to August 2017. In terms of the rupee export proceeds this was a 24.7 per cent rise in the current fiscal, in large part because of the 17 per cent depreciation in the exchange rate over the last year. Further good news comes in the form of exports exceeding the $2 billion mark, a psychological waypoint that will have been noted by external observers. Remittances are also enjoying an uptick after a year in the doldrums, rising 13.5 per cent over last year. With exports and remittances both looking rosier the other side of the coin is that imports and the trade deficit have largely flatlined, with the trade deficit a matter of considerable concern.

For the incoming government all this is good news, but what must be understood is that the PTI government can claim none of the credit, as all of the positivity currently on show is the direct product of the economic actions of their predecessors, an uncomfortable fact that is unlikely to be making headlines in the PTI internal memos. The fact is that although the PML-N left a mess of a fiscal legacy not everything it did was bad — and some of it worked as we can now plainly see.

Whatever the new government is going to do in economic terms the effects are unlikely to be felt much before the New Year because economies do not make a push-button response anywhere in the world. In that context the work of the Economic Advisory Council assumes considerable significance because the incomers are in many cases new to the business of macro governance even if they have previous provincial experience. The future economic performance of the PTI government is going to in part be dependent on the quality of the advice they are given — and whether that is listened to.

Published in The Express Tribune, September 13^th, 2018.

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