- Good news won’t last unless government puts in effort
That the country’s current account has remained in surplus for the first quarter is cause for celebration, but does not quite justify the jubilation being shown in official quarters. It does not mean that the country’s economic problems are over, or even that the economy has moved into the right direction. The current account experienced a surplus of $73 million during September, taking the cumulative surplus to $792 million. However, there needs to be some caution, because exports have not recovered, and in fact are lower than last year’s first quarter, being only $5.36 billion, as opposed to $5.98 billion last year. Despite a massive devaluation, imports have only declined to $10.61 from $11 billion last year, with the result that the trade deficit has actually grown, to $5.25 billion from $5.05 billion.
The current account was placed in surplus by worker’s remittances, which were $7.15 billion this year, as opposed to $5.45 billion last year. That is hardly the best source to rely on, though the PTI, which relies on overseas Pakistanis, would be naturally optimistic, because the global downturn induced by the pandemic means that Pakistani labour, instead of sending remittances, would lose their jobs and return home. Money that came to Pakistan because the Hajj was suspended will dry up soon.
The government should understand that the country’s most lucrative markets, Europe and the USA, have begun to experience the dreaded second wave of the covid-19 pandemic, and are thus unlikely to buy Pakistani exports. The government must focus on the challenges ahead, over which it will not be able to exert any control. The problem with the jubilation by Prime Minister Imran Khan in his tweet on the news is that it indicates that he is not getting realistic assessments, which in turn will lead to economic decision-making based on his imagination, rather than the economy as it really is. Also, such celebrations may mislead those who think the economy is doing well, and thus make them make incorrect decisions. The Prime Minister should realize that having wrong ideas about the economy has real-world costs for millions of people trying to make ends meet.