Deteriorating agri sector can undermine optimism

Industry player calls for swift reforms in wake of contraction of imports

LAHORE:

Pakistan’s current account has been recording a surplus for the past four months which is a positive development, however, it continues to surprise a majority of businessmen and economists.

According to data of the State Bank of Pakistan (SBP), the current account surplus stood at $382 million in first four months of the current fiscal year and major factors behind the surplus were the drop in volume of imports and higher inflow of workers’ remittances.

Still, the country is facing an acute wave of unemployment and low business activities across the board, excluding the export sector, with no significant expansion in large or small-scale industrial units.

Pakistan Cotton Ginners Association former chairman Shahzad Ali Khan told The Express Tribune that apparently the claims of different government officials and Prime Minister Imran Khan about a rebound in the economy were true.

“The current account surplus is positive news, however, it has been achieved by curbing imports. The ideal situation would have been a surplus by boosting exports,” Khan said.

“The positive news is that Pakistan has managed to sustain the export volume at a time when exports of our competitors are falling due to Covid-19.”

However, Khan voiced fear that the entire optimism about the economy could be undermined by the deteriorating state of agriculture. “We are losing ground when it comes to the agriculture sector which we claim is the backbone of country’s economy,” he said.

He questioned how much value could be added by the textile sector when it was importing cotton.

Khan lamented that other major produce of Pakistan such as wheat, sugarcane and maize was also underperforming. Swift reforms in the agriculture sector were the need of the hour since low imports could impact it along with other sectors, he pointed out.

Economist Dr Qais Aslam said that Pakistan’s economy was in a messy state. He told The Express Tribune that one could not say that the current account surplus reflected a rebound in the economy when some of the key indicators were still negative.

“Pakistan’s economy is at its lowest level and it will rebound modestly,” he said. “We have to keep in view forecast of the World Bank, which predicts just 0.5% growth in the economy for the current fiscal year.”

Published in The Express Tribune, December 3^rd, 2020.

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