Jungibaaz
RETIRED MOD
- Jul 4, 2010
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The government is working actively to reduce the current account deficit at this time, fiscal deficit is another balancing act. PKR devaluation was allowed to happen after many years of SBP being forced to fight it. Inflation should level off since this is an exchange rate shock, tighter monetary policy might put some downward pressure on growth. But it will help ease inflation, stablisise PKR, and mostly reduce growth in areas where growth needed to be reigned in to reduce the current account deficit. There are multiple layers to Pakistan's economic problems, growth itself is being limited by financial sustainability, and in order to balance the effects on growth, I assume they're now also loosening fiscal targets. The inflation rate is more of an acute problem that can be dealt with more easily.
With good but unpopular policy measures, we should see a more sustainble ratio of exports to imports, lower than expected growth and hopefully inflation back to normal. This we can expect even without counting the infrastructure gains by 2023 and attempts to boost exports and revitalise industry.
We'll lose a few more years, but if it's done right, this short term pain will be worth the much more sustainable growth to come.
Imran Khan is not a magician, he and his party have made tons of idiotic promises both as policy and rhetoric, all of which they cannot and should not aim to keep. If he goes against the promises he made and gets serious about fixing the economy, you will see more unpopular policies. Growth will be lower than expected for quite a while.
IK wasn't elected on a platform promising higher inflation, higher energy prices, worse conditions for consumers, less subsidies, lower growth, falling wages in real terms etc. But this is what he'll have to do in order to fix imbalances, while simultaneously making efforts to boost industry.
And while he does this, the opposition will go after him hard. Afterall, this is what PTI had done in opposition too. Even if the government does what's right, they'll be attacked by the opposition for every policy.
