EDITORIAL: Shooting for the moon is good, as they say, because even if you miss you’ll land among the stars. But why you must still have your feet firmly on the ground is so self-explanatory that nobody felt the need to add it to the old adage.
And the government’s sudden plan to raise exports to $57 billion by 2025, just when the trade deficit clocked in at an all-time high in November and the Current Account Deficit (CAD) shot well past the (adjusted) annual projection of $4 billion, smacks of the old-fashioned attempt to divert everybody’s attention away from the external account collapse that is playing out right before our eyes.
That’s because the commerce ministry hasn’t taken the trouble to explain just what will breathe such life into exports when just about every measure that can possibly stimulate progressive commerce has been tried and found wanting.
Even the epic depreciation of the rupee barely made exports budge to the upside. It’s also shed no light on what it intends to do about imports that now outpace exports many times over; which naturally makes stimulating exports a self-defeating exercise.
Yet, perhaps even more importantly, building the official narrative around numbers and trends and efforts to enhance export earnings shows that the government might be misreading the global economic situation. A post-pandemic world is never the same as the one that falls into it.
The Great Plague, for example, shook Europe’s feudal structure to the core because it killed most peasants that worked on the lands; hence forcing a change on the societal order that could otherwise have taken decades, perhaps even centuries. Similarly, Covid-19 seems to have sounded the death knell for the dominant neoliberal ‘financialised’ economic order.
The vulnerability of global supply chains and just-in-time-production, etc., has been fatally exposed and a lot of advanced countries are rediscovering the logic behind import substitution half a century after the world moved on from it.
Since Pakistan was among the first countries to emerge from worldwide lockdowns that followed the first wave of the coronavirus, and initially captured prized export markets because of its success, it should also have been one of the first to note that the hybrid Austrian school-Monetarist school amalgam of modern turbo charged corporate trade was fast becoming a thing of the past.
Countries like Pakistan will need a lot of time to do all that is necessary to substantially improve exports. So their immediate focus will have to be on cutting imports. And that would require erection of a new kind of production base; one which will provide a lot of items that show up on the import bill right now.
Islamabad should stop wasting time in pursuing policies that are no longer fruitfully applicable. It should rather invest all the time and energy it can spare into identifying ways in which it can be ahead of the curve in the new trade order that is emerging.
The need to protect the trade balance has never been greater, of course, especially with the IMF (International Monetary Fund) programme still hanging in the balance, the rupee having set 11 all-time lows already in December alone and the current account raising a red flag before half the fiscal year is over. And it doesn’t help the balance sheet that remittances appear to be plateauing now that international travel has resumed.
There’s no doubt that everybody’s for better exports, but the commerce ministry and therefore the government will really have to get their act together because nobody will be too impressed by this wish list, especially this late in the cycle. Rather than build false expectations, and have the people do the same, the government should invite senior economists and market leaders in order to hammer out a viable strategy while the centre does what it must to turn exports around.
Copyright Business Recorder, 2021
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