Chasing Our Own Tail
Pakistan’s efforts to stabilize the economy seem futile, as GDP growth dwindles to 0.3% in September 2023.
The atmosphere is marked by faint optimism as the Rupee strengthened against the greenback clocking in at PKR 291.76 as of September 22, 2023. However, simultaneously, foreign reserves are depleting, and there is a deceleration in GDP growth. This slowdown in the economy is primarily caused by reduced consumption induced by high inflation and codirectional measures.
Specifically, delays in opening letters of credit for importing essential raw materials have affected most industries in Pakistan whether it be automobiles, poultry, etc. Is Pakistan still chasing its economic troubles in a way that seems like a wild goose chase?
In 2022, Pakistan’s GDP growth was comparable to the regional average standing at 6.1%. This number has slowly dropped down to the current 0.3% as of September 2023. The Asian Development Bank has forecasted that it may increase up to 1.9% by the same time next year. This decline in Pakistan's GDP is primarily due to a significant decrease in consumption. At the same time, Pakistan’s foreign reserves are slowly dwindling causing worry for Pakistan’s future dealings with the IMF.
From an economic standpoint, everything that transpired over the past year followed a textbook script. The problem appears to be related to setting goals and accurately targeting the right 'indicators.' Currently, there is a focus on bringing the exchange rate down, yet there seems to be a reluctance to ease import restrictions that can stabilize the country’s struggling industries.
Pakistan's economy repeatedly highlights the fact that it cannot be managed as simply as an accounting challenge.
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