The reigning political instability in the country – coupled with the weakening rupee and the rising oil prices – continues to take its toll on the economy. With the foreign currency reserves held by the central back falling to a four-year low of $6.7 billion – barely enough to cover exports of five weeks – the threat of default on foreign payments looms large. And the reports that thousands of containers carrying food and cosmetics items as well as mobile phones, vehicles, home appliances and furniture are stuck at Port Qasim Karachi for reasons including non-opening of LCs are doing no good to the business climate in the country.
Given the bleak economic situation, the investors’ confidence across diversified sectors of the economy is eroding day by day. In the past six months, the overall Business Confidence Score (BCS) has dropped 21 percentage points to negative 4%. In the previous survey conducted in March-April 2022 by the Overseas Investors Chamber of Commerce and Industry, the BCS stood at a positive 17%. The highest drop in confidence was recorded in the services sector (24%), followed by retail and wholesale trade (22%) and the manufacturing sector (20%).
Besides political instability, rupee devaluation and high fuel prices, two more factors causing a decline in business confidence include the high electricity cost and ineffective commercial and trade policies. Unfortunately, the government has no plans to ride through the prevailing crisis other than looking up to friendly countries to shore up the forex reserves and help with the threatening balance-of-payments situation. The opposition too does not realise the gravity of the situation and remains locked in a political tug of war with the government. It’s time for politicians on both sides of the divide to agree on a charter on economy and take the first step of bringing the political temperature in the country down – something without which no efforts for addressing the faltering economy can succeed.
Published in The Express Tribune, December 12th, 2022.
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