Notwithstanding that staying up to date in a world where you are constantly bombarded by all kinds of information, including fake information, is a huge hassle, with which one in any case continues to struggle; I however seem to be getting bogged down with another problem, I am generally getting it wrong.
As an example, whilst I am obviously elated that Pakistan was one of the top 20 countries which improved their World Bank Ease of Doing Business ranking, and that too by a whopping 28-point improvement, I have yet to find time to read the detailed report. But even a brief scan of the report, which by the way is a thick 117 pages publication, tells me I am looking at the wrong things, I am definitely getting it wrong. First of all, the sample size for Pakistan are Karachi and Lahore, and perhaps rightly so, but does it mean all bets are off when it comes to doing business in Peshawar? Even between the two cities, there is a significant difference; as an example, when it comes to their individual rankings vis-à-vis property registration. An innocent question is why?
A larger concern, rather hope, is how did we accomplish this amazing feat, and what is the target for next year. To get to that however a detailed reading is a precondition; especially when one looks at the primary indicators used for the rankings. Registering property is one thing, enforcing property rights and contracts is an entirely different ball game; time and cost to resolve a commercial dispute and the quality of judicial processes. And as I keep repeating, ye who bow to capitalism, property rights and contract enforcement are the pillars on which it stands; so how can we pursue capitalism when we ab initio lack these pillars? But like I said, I keep getting it wrong.
Perhaps my friends are right, I am a worrywart. We should celebrate when we can and enjoy all the investors rushing to Pakistan to do business.
Another thing I am always getting wrong is managing the allowed column space; at the middle point, I have yet to start the topic!
Finally got around to reading ADB outlook 2019 update September 2019.
Contrary to the popular media take away from the report, which a month ago, was broadly limited to ADB asserting that Pakistan's growth is expected to be the lowest in South Asia, I am definitely getting it wrong.
My biggest concern is ADB's view that for multiple reasons, including US-China trade war and Brexit, the outlook for global trade in manufacture is grim. It is indeed very heartening to know that our exports have increased quantitatively, again I am lagging with reading on this account and hence unaware which goods have led the improvement, however, if ADB is right and world trade is sliding downwards, the likelihood of exports continuing to lead the economic recovery, does get a bit bleak.
And even if I am getting it wrong, why do I worry?
Well, because ADB finds that even with a lower growth, private consumption accounted for 82% of GDP in Pakistan and there was a contraction in fixed investment; significantly reduced public investment and marked fall in private investment. So if we are not investing, we are probably selling more of raw produce, and our consumption is being sustained by imports.
Perhaps investment might increase because of the magnificent increase in ease of doing business ranking, but I fear that an uncertain rupee and high borrowing costs might have an equal and opposite reaction; but then I am prone to getting it wrong.
Dear readers, humour me even if I get it wrong; if world trade is expected to go down, and globally tariffs are on the increase due to the American initiatives, then banking on exports to manage the trade deficit might just be getting it wrong! Perhaps import compression through tariffs in the short-term and planned investment in import substitution manufacturing in the medium term is the only path.
Luring dollars into domestic bonds is another strategy, but I get it wrong again since it does appear to be the same strategy of defending the rupee valuation through debt, albeit at an even steeper cost. The Egyptians did the very same thing, and the news is that their economy is looking good (again lagging behind on reading), even if the populace might believe that the economy may look good, but is not feeling good. What do these common men know about the economy anyway? They always get it wrong!
Having reached the finish line, I come to the conclusion with the commitment to continue with ADB findings in a follow up column; probably before or after the problem statement conclusion.
Perhaps I always get it wrong; GDP is a key indicator and not an impostor; trade deficit should not be strictly controlled by monitoring and curtailing imports; and planned industrialization is a bad strategy compared with free market policy, since markets are humans and human always get it right.
Accordingly, and because I am not a broken clock, and hence expected to get it wrong all the time, perhaps I should only be humoured for entertainment value, if not for the sake of debate. So no worries, lay back and enjoy; and we have other things to worry about, like the dharna.
But here is a frightening thought, nobody can get it right all the time, and what if this time around, they are getting it wrong.
(The writer is a chartered accountant based in Islamabad. Email: [email protected])
Copyright Business Recorder, 2019
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