- The economics of revival will be harder than it seems
Even though of the world’s three greatest economic powerhouses, only China has probably passed the worst effects of the Covid-19 pandemic, while Europe is probably passing through it and while the USA is probably not yet at the apex, there has already begun loud thinking about how the post-pandemic economic landscape will look. As the fears seem to grow louder of the coming of another Great Depression, economic minnows like Pakistan must think about the new circumstances that will arise. One of the first things to realize is that there will be a probably permanent transformation of global trading patterns, and Pakistan’s pampered trading groups, like the textile lobby, may not be able to get back on their feet. There must no longer be the traditional reliance on primary product like yarn, but a switch to more value addition.
One dilemma that Pakistan will face is that it will not know how to make a budget. The downturn has meant that not just revenue projections for 2019-2020 have been rendered nonsensical, but so have those for the future. More urgently, Pakistan is heading for the kind of foreign exchange crisis that afflicted the country when the current government took over, but without even the woefully inadequate buffers of some exports and workers’ remittances. Though governments seem to have frightened themselves with the lockdown, they should have the courage to stay the course, and keep in mind that a premature return to work might throw away all the gains won so far at such great cost.
One of the problems that Pakistan faces is that it was embroiled in an economic crisis even before the pandemic set in. It was felt that is this was because Pakistan had hastily agreed to a painful IMF programme, and the Finance Minister responsible for not handling the crisis, and who had to be sacked because the IMF didn’t want him was Asad Umar. Now the new crisis sees him as the lead minister, this time with the Planning portfolio. Has experience made him wiser? This is hardly the time to experiment.
