What good is wisdom, when it brings no profit to the wise? If only the government had employed its ambitious trade outreach (displayed of late) in earlier years, the revenue situation would not have been so tight. Yet dwelling in the past is hardly any more rewarding. Which brings us to the present, which betrays a clear understanding in Islamabad that without reorienting trade markets, deficits will make survival near-impossible. The downside is that the initiative to expand market outreach is not matched by an equally spirited drive to leverage industry and manufacturing to add value to the present export basket.
After China, India and Russia, Australia is indeed the ideal market for Pakistan to penetrate. It has formed an integral part of the emerging market complex, Asia’s expanding economies that led the initial bottoming out of the ’08 recession. It is the centre of the global commodity trade, whose symbiotic relationship with China’s furious growth sustained increased production and employment across the continent. For Pakistan to gain easy access to its market can ideally be reciprocated by opening our markets for its commodity endowment, an exercise that can work to ideal mutual benefit. To even think of such an arrangement, Pakistan will have to initiate serious fiscal expansion programs, which will then tap the all important Asia-Pacific commodity trade.
Fiscal expansion, of course, works only when complemented by an appropriate monetary policy. That in turn implies that the government will have to overcome some of its more blatant excesses, or the entire sequence of events stemming from expanding markets will fall off track. So long as the government is borrowing in bulk, the central bank’s policy is compromised. And so long as it fails to check needless leakages in the real economy, there will be little fiscal elbow room for corrective adventures. Once we take some essential steps, not only will we engage more with emerging markets, but also stand among them.