Economic woes pile up

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• Economic management remains unimpressive

The coronavirus is bad news, and the pandemic has knocked the bottom out of the economy, but the data coming in does not bear out the enthusiasm recently shown by the State Bank Governor. What the crisis seems to really mean is the blatant failure of the government to meet any of its economic targets. The latest bit of bad news is the unemployment figure, which has reached 8.53 percent at the end of the current fiscal year, 2019-2020. The rate was 5.8 percent at the end of the PML-N’s tenure in 2018, which indicates that the PTI’s election promises of creating jobs aplenty, has come badly unstuck. The government itself is setting a growth target of 2.3 percent for 2020-2021, which indicates that it expects per capita income to stagnate, because the rate is only marginally above the population growth rate of 2.1 percent (and even this figure is doubtful, being derived from the last census, which was hit by controversy).

That is probably a small improvement over the current year, which is expected actually to register growth of -0.38 percent, actually negative, without any adjustment for population growth. Such growth figures are reflected in major job losses, with large numbers being thrown out of work. The PTI is further hampered by its IMF agreement for an Extended Fund Facility. The IMF had told it that it expects the budget to freeze salaries and pensions, and to cut the primary deficit which is being pitched too high. Apart from the suffering that would entail, freezing budgets for sectors which have been used to getting money would cause the present government difficulties. The PTI’s initial premise, that it would bring back looted wealth and prosecute the corrupt politicians who had reduced the economy to a shambles was not working anyhow, and the covid-19 pandemic has knocked it for a six.

The PTI has not got much good economic news coming. Worse is still to come. First, the agriculture production estimates have not considered the impact of the locust infestation. Second, the covid-19 pandemic has not wreaked its worst in Pakistan. Taking these into consideration, it is possible that next year’s growth predictions might be overly optimistic.

from Pakistan Today https://ift.tt/3gZxAmo