Fears and projections

The government is betting on a tricky forecast as it sees a rosy picture for the economy. But with a tongue-in-cheek it admits that severe problems are there as it navigates a feeble GDP growth of 2.13%, coupled with a staggering 22% interest rate, which is untenable as it brings significant pressure on expenditures. Yet, there are some salient features to cherish such as bulls ruling the bourses for the last one month, and KSE Index propelling over 33% by surpassing the 62,000-point mark for the first time in history. Likewise, a successful deal with the IMF, stability in the currency market, reforms in security exchange companies and a promising crackdown on illicit trade from Afghanistan had triggered buoyancy.

The Ministry of Finance in its monthly ‘Economic Update & Outlook’ is, however, worried over higher mark-up payments. And this is a real issue as the goalposts keep on changing on the dollar-rupee parity. This is why the State Bank has projected 2 to 3% real GDP growth as inflation hovers over 22%, and circular debt touching Rs75 billion in the first quarter of FY24. In such a scenario, it is not clear as to how the beleaguered caretaker dispensation is banking on curbing inflation and upping the bar on economic activities. The recent law and order fiasco on the Karakorum Highway and similar skirmishes with non-state actors in Balochistan is a grim reminder that security and economy are in rough waters, and are in need of more than routine scrutiny.

Pakistan is looking for some big-ticket ventures and the recent MoUs signed with the UAE and Kuwait are indicators that the roadmap for progress is on the cards. Likewise, the surge in IT exports by 15% in the last quarter unfortunately was met with a 29% fall in FDIs in the same period, notwithstanding some progress in cotton exports that crossed 125,000 bales. The one-step forward and two-steps back puzzle demands political stability and a strategy free from a time-barred policy approach to usher in sustained progress.

Published in The Express Tribune, December 5^th, 2023.

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