It’s the economy, stupid

As we grapple with load shedding, intermittent bomb blasts and public spankings of our national self-esteem in the global arena, let us not forget the silver lining: the sweltering heat means that we should be expecting an exceptionally sweet crop of mangos this year.
Unfortunately, we may not be able to afford them. A recent survey jointly conducted by rozee.pk and YouGov revealed that one quarter of our professional workforce did not receive any increase in salary over the past year. The remaining three quarters that were fortunate enough to get salary bumps, reported an average increase of 12 per cent.
However, their cost of living increased by more than 30 per cent according to the majority of survey respondents. This means that our workforce saw a net decline in purchasing power this year. The survey revealed that food and petrol costs by far dominated the increase in living expenses.
I’m sure most of us are not surprised by the finding that inflation has outpaced wage increases. Data from the State Bank of Pakistan suggests that food prices, which dominate the inflationary bellwether Consumer Price Index, increased by almost 90 per cent over the last three years. In 2007, the price of a 10kg bag of wheat was Rs120 — today it has more than doubled to over Rs260. Similarly, fuel costs which tend of drive prices of almost everything else saw a steep rise. In 2007, a liter of diesel could be had for just Rs38, again more than doubling.
High inflation is not necessarily a bad thing, especially when coupled with a growing economy. But sadly, our well-below-target 2010 GDP figure of 1.2 per cent indicates that the economy is struggling. Businesses are suffering from an increase in operational costs and in many cases, unavailability of essential resources such as natural gas. They simply cannot afford to give salary increases to their workers. The situation is not sustainable.
It is times like these that we look towards the enlightened hand of government. Straddled by huge cash deficits and shaky relations with our foreign sugar-daddies, the government’s seemingly insatiable appetite for borrowing has starved the private sector of working capital – our banks are busy making easy money by lending almost exclusively to the government. The stock of outstanding borrowings of the government from the State Bank is in excess of Rs1.5 trillion today compared to Rs53 billion in 2007. Unavailability of private sector credit has a huge impact on the future productive capacity of the economy. To make matters worse, the government is determined to increase taxes on the current tax base instead of focusing on widening the net. Yes, that should do it.
All hope is not lost for our mango farmers and their juicy harvest. Pakistani diplomats, understanding the need of the hour, have been working feverishly in Washington. In a major diplomatic and trade victory, this will be the first season of Pakistani mangos in the US. It is expected that over 500,000 metric tonnes of mangos from Pakistan will be consumed this year in the United States, shattering perceptions that the land of the pure only exports terrorism.

The writer runs rozee.pk, the leading online job portal connecting five million professionals with employment opportunities across 40,000 businesses. He can be reached at [email protected].