Is the economy recovering?

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  • Depends on how you look at things

 

Prime Minister Imran Khan on a regular basis insists that the economy is heading in the right direction and that the worst is over. His chief economic advisor concurs as does the SBP governor. The same narrative has been disseminated throughout the PTI government with everyone who matters peddling the same ‘economy is in recovery mode’ mantra. This optimism is primarily based on rupee value stabilisation and a rapidly shrinking current account deficit, with the month of October showing a $99 million surplus for the first time in four years. This is predominantly on the back of a fall in imports (a result of a higher exchange rate and the government’s restrictions) while exports have shown very nominal improvement, increasing to $8.22 billion as compared to $7.9 billion last fiscal year. The government will of course not shed as much light on or completely ignore the other indicators that aren’t so positive. The tax revenue target for the second quarter of this year is expected to be missed and this coupled with the missed target last quarter has reportedly compelled the FBR to seek a downward revision of Rs233 billion in the mammoth Rs5.5 trillion annual target, a plea the IMF has flat out rejected. Inflation, albeit temporary until monetary policy tightening is tapered off by the central bank, has right now made even basic necessities like vegetables unaffordable. Where exactly PM’s Finance Adviser Hafeez Sheikh has been purchasing tomatoes for Rs17 a kilo, only he knows. Unemployment is steadily rising with the latest figures from Punjab painting a chilling picture of what is to come as in the past year close to 200,000 people have been laid off from the industrial sector. With the economy not expected to grow at more than 2.4% in the near future, this figure is only going to increase.

As the government chooses to cherrypick the macroeconomic indicators and misrepresent them, as some of its ministers have, by conveniently comparing them to only those past numbers that make theirs look better, the on-ground situation continues to deteriorate. The low revenue collection is a serious problem as is high unemployment. Ignoring them will only make the situation worse. The populace needs to be informed about why these problems exist and what the government is doing to fix them.