Exports have increased by 24% in rupee terms

[Imran Khan]

You are making jest of an issue that requires careful calibration.

a food for thought sir

 

[Progressive Conservative]

Ordinarily, that would work.

With Pakistan, the price of the imports does indeed go up - in rupees. Which means that the hard currency remittances still have the same purchasing power for the families receiving those remittances, the net result being that they are insulated and still drive import demand while the local earners cannot afford what they used to be able to do.

Thanks for this. This is a very good point that I had not previously considered.

 

[VCheng]

Thanks for this. This is a very good point that I had not previously considered.

If one considers other effects of these remittances, such as distortion of the real estate market, then it is obvious that remittances will never be an adequate substitute for actual hard currency exports arising from within Pakistan. Exporting cheap labor will help the balance of payments somewhat via remittances, but it creates its own problems.

 

[Progressive Conservative]

If one considers other effects of these remittances, such as distortion of the real estate market, then it is obvious that remittances will never be an adequate substitute for actual hard currency exports arising from within Pakistan. Exporting cheap labor will help the balance of payments somewhat via remittances, but it creates its own problems.

I agree it is not a good substitute for hard exports, but there are other key benefits. One of them being the effect of exporting cheap labour on the labour market in Pakistan. Think how much higher the unemployment rate, and all the associated societal problem, would be if they were all in Pakistan.

 

[VCheng]

I agree it is not a good substitute for hard exports, but there are other key benefits. One of them being the effect of exporting cheap labour on the labour market in Pakistan. Think how much higher the unemployment rate, and all the associated societal problem, would be if they were all in Pakistan.

That is a good point, but that cheap labor is the first to be sent back if there is a global recession. And we are overdue for a correction already.