ADB sees economic recovery in Pakistan

[Mav3rick]

How bad? Exports and current account surplus is continuously going up?

You keep reposting the exact same things again and again but you yourself don't understand and worse thing is that to you whoever is critical of IK and PTI's awful performance over the past 2+ years has to be a PPP/PML supporter.

CAS/CAD etc. are inconsequential if the growth of the economy is on the right track; let me explain this too, if your CAD is being offset in some other way such as remittances then there is nothing to panic about...….infact, even if you have to take loans to offset the CAD which is there because of your larger imports of machinery, equipment and raw material that you need to establish an industrial base which you would eventually cut back into CAS when that industry start manufacturing and exporting then it is not a BAD deal. It takes time, patience, stability and unity.

Ideally, the country would have a CAS, more exports as opposed to more imports and savings in the form of surplus and remittances. However, if our remittances are sufficient to offset the CAD then there is no need to panic, especially if it keeps a stable PKR->USD conversion rate, that too in favor of Pakistan and keeps the reserved healthy. You keep posting about the condition of the economy when PTI came to power but conveniently leave out the state of economy when PML came into power; and you write-off the conditions of Governance where this PTI Government is neither constricted by the establishment nor the over-zealous judiciary which was a routine for PML from dharnas right from the word go to daily suo-moto notices to ministers to overt establishment moves against the Government etc.

However, you are more interested in insults and abusing people rather than to discuss anything logically and factually. And if you cannot be impartial, in favor of Pakistan, then there is no point in discussing anything at all!

 

[Jungibaaz]

You keep reposting the exact same things again and again but you yourself don't understand and worse thing is that to you whoever is critical of IK and PTI's awful performance over the past 2+ years has to be a PPP/PML supporter.

CAS/CAD etc. are inconsequential if the growth of the economy is on the right track; let me explain this too, if your CAD is being offset in some other way such as remittances then there is nothing to panic about...….infact, even if you have to take loans to offset the CAD which is there because of your larger imports of machinery, equipment and raw material that you need to establish an industrial base which you would eventually cut back into CAS when that industry start manufacturing and exporting then it is not a BAD deal. It takes time, patience, stability and unity.

Ideally, the country would have a CAS, more exports as opposed to more imports and savings in the form of surplus and remittances. However, if our remittances are sufficient to offset the CAD then there is no need to panic, especially if it keeps a stable PKR->USD conversion rate, that too in favor of Pakistan and keeps the reserved healthy. You keep posting about the condition of the economy when PTI came to power but conveniently leave out the state of economy when PML came into power; and you write-off the conditions of Governance where this PTI Government is neither constricted by the establishment nor the over-zealous judiciary which was a routine for PML from dharnas right from the word go to daily suo-moto notices to ministers to overt establishment moves against the Government etc.

However, you are more interested in insults and abusing people rather than to discuss anything logically and factually. And if you cannot be impartial, in favor of Pakistan, then there is no point in discussing anything at all!

I partially agree here, but Ishaq Dar era economic policy had one major failing, and that is the use of reserves to peg PKR at a way overvalued rate. This both deteriorated CAD, and destabilised us financially. If it was not for that, there would be no question that the previous PML tenure showed superior economic indicators and that even the high CAD was in part a sign of some major capex and industrial development.

 

[Patriot forever]

I partially agree here, but Ishaq Dar era economic policy had one major failing, and that is the use of reserves to peg PKR at a way overvalued rate. This both deteriorated CAD, and destabilised us financially. If it was not for that, there would be no question that the previous PML tenure showed superior economic indicators and that even the high CAD was in part a sign of some major capex and industrial development.

Sir to sum up your post it is a sugar coated way of saying 'it was an artificial boom and bust cycle' as soon as any measures were taken to curb CAD as well as setting rupee parity to attain macro economic stability the indicators would fall off the cliff. Inflation would sky rocket as rupee was no longer artificially overvalued and would fall back to it's true level ( which was artificially masked, but actual depreciation happened in Plmn tenure) , imports become expensive which the nation was made addicted to, even raw material import prices would jump exponentially with ripple effect in LSM, not to mention oil and energy sector largely dependent on imported fuel.

PLMN should be given credit for the bust part of the cycle as well, which PTI is currently taking the slack for. Nice way of giving half picture.

What we are witnessing now is organic growth and not at the expense of macro economic stability as previously.

You pump money in by SBP printing spree as well as subsidize imports, consumption increases inflating your GDP figures. You destroy your country for political gain.

 

[ziaulislam]

I guess you are some special sort of a retard when you cannot see how damned the financial situation is and continue to tag people who are least bothered by your nonexistent intellect. Some special youthia you are, and what a life it must be to sit at a computer all day and all night long, At the end of the day, you would have my sympathy if you weren't this pathetic.

I refuse to accept that someone can have lower IQ then 60(7 yrs old) and is on this forum.
Even a 7yrs will tell you why pakistan is like this..
Qaraz ley ka leya aur nakli note chap leya..

Ironically PMLN or state bank of pakistan doesnt deny state bank lending(note printing) or heavy expensive eurobonds...but their jayalas and matwalas try their best...

Why..simply because they are eating part of the cake that starts with billions and ends with biryani plate

 

[Jungibaaz]

Sir to sum up your post it is a sugar coated way of saying 'it was an artificial boom and bust cycle' as soon as any measures were taken to curb CAD as well as setting rupee parity to attain macro economic stability the indicators would fall off the cliff. Inflation would sky rocket as rupee was no longer artificially overvalued and would fall back to it's true level, even raw material import prices would jump exponentially with ripple effect in LSM.

PLMN should be given credit for the bust part of the cycle as well, which PTI is currently taking the slack for. Nice way of giving half picture.

Where did I sugar coat anything? And also no I don’t agree, this was not whatever you mean by ‘artificial’ boom and bust cycle. If you mean to say that it was a deliberate sabotage, then I disagree. My own assessment judging by the policies and their aims is that it was incompetence and misjudgement. I’d refer you to Hanlon’s Razor:

"never attribute to malice that which is adequately explained by stupidity"

Besides, if you’re going to claim it was deliberate, then you need a giant weight of evidence. Try convincing any economist of your theory, even the government’s own economic advisors wouldn’t give it the time of day.

My summary for Ishaq Dar era is simple, those policies of overvaluing PKR had probably good intentions, and burning reserves they may have felt it was worth it. But it was a bad policy in hindsight and has cost us. Current government policy has rightly tried to reverse some of the damage done.

 

[ziaulislam]

I partially agree here, but Ishaq Dar era economic policy had one major failing, and that is the use of reserves to peg PKR at a way overvalued rate. This both deteriorated CAD, and destabilised us financially. If it was not for that, there would be no question that the previous PML tenure showed superior economic indicators and that even the high CAD was in part a sign of some major capex and industrial development.

CAD grew because of state bank lending done for heavy spending ..

Basically the govt printed fake money spent it on highways and ultimately when people got that money rupee had to devlaue but it didnt..people spent that money on imports


So it always start with print fake notes and drop the interest rate which creates a fiscsl space of 1-2 trillion rupees

Even PTI had to do it first 2 yrs while it tried to close that 2 trillion gap

As for Ishaq Dar era, those policies of overvaluing PKR had probably good intentions, and burning reserves they may have felt it was worth it. But it was a bad policy in hindsight and has cost us.

No sir..
It wasnt..
This has been done three times before..
And will be done again in 2028..
They knew what they did but did it anyway for heavy spending means more votes
Ps
Right here on this forum i was predicting we will be back to IMF in 2016 when pakistan started printing notes
Ishaq hassan predicted it in early 2017

Simply because this is the oldest play book
Zimbabwe to afgahnistan to pakistan

Everyone likes to print notes

 

[ziaulislam]

 

[Patriot forever]

Where did I sugar coat anything? And also no I don’t agree, this was not whatever you mean by ‘artificial’ boom and bust cycle. If you mean to say that it was a deliberate sabotage, then I disagree. My own assessment judging by the policies and their aims is that it was incompetence and misjudgement. I’d refer you to Hanlon’s Razor:

"never attribute to malice that which is adequately explained by stupidity"

Besides, if you’re going to claim it was deliberate, then you need a giant weight of evidence. Try convincing any economist of your theory, even the government’s own economic advisors wouldn’t give it the time of day.

My summary for Ishaq Dar era is simple, those policies of overvaluing PKR had probably good intentions, and burning reserves they may have felt it was worth it. But it was a bad policy in hindsight and has cost us. Current government policy has rightly tried to reverse some of the damage done.

I do not know if you read my post correctly, 'boom and bust' is a common term used for bubble growth. I stand by what I said, you can easily term it as stupidity, incompetence and mismanagement.
But they very well knew the the consequences, they deliberately left it to the next government.

To support my argument, PLMN knew and started the process of approaching IMF but did not enter into a contract as they did not want to loose political capital and left it for the next government.
They tried to devalue rupee but stopped fearing public outcry.

Our country was suffering from severe economic crisis, not seen by any incoming government in history.

 

[Jungibaaz]

CAD grew because of state bank lending done for heavy spending ..

Basically the govt printed fake money spent it on highways and ultimately when people got that money rupee had to devlaue but it didnt..people spent that money on imports


So it always start with print fake notes and drop the interest rate which creates a fiscsl space of 1-2 trillion rupees

Even PTI had to do it first 2 yrs while it tried to close that 2 trillion gap

No sir..
It wasnt..
This has been done three times before..
And will be done again in 2028..
They knew what they did but did it anyway for heavy spending means more votes

I disagree, do you know what it means to ‘print money’? Or how it is done? Please show me money supply growth during that period, and point out wherever it is you think the government printed money.

Money creation is done through the banking system NOT through the fiscal channel. This is basic economics. Also, the main effect of money supply growth besides increased output is large increases in prices. Here’s a basic if not completely realistic relationship:

Quantity Theory of Money

Fischer Version MV=PT,

• M = Money Supply
• V= Velocity of circulation
• P= Price Level and
• T = Transactions.

T is difficult to measure so it is often substituted for Y = National Income

MV = PY where Y =national output

(I don't completely agree with this theory, but even so, its predictive effects are usually valid given a few constants and assumptions).

Secondly, here's Pakistan's money supply (M3) over the last 10 years:

The growth in that era was steady, no big spike. In fact, the only real spike has come recently. And if your theory about money printing for fiscal stimulus and spending were true (it certainly isn't true), then the effect on inflation in that era would be opposite of what was actually observed. The inflation rate was decreasing steadily throughout those years.

CAD grew because our import bill grew. When you try and actively grow the economy beyond the means with which it can manage sustainably, by employing policies like overvaluing PKR. You make imports much cheaper and exports less competitive, this may lead to lower inflation and higher temporary purchasing power, and therefore consumption driven growth. We were also importing quite a lot more due to CPEC, including machinery and capital.

All together it was these policies that cased CAD. It has nothing to do with money printing etc.

I do not know if you read my post correctly, 'boom and bust' is a common term used for bubble growth. I stand by what I said, you can easily term it as stupidity, incompetence and mismanagement.
But they very well knew the the consequences, they deliberately left it to the next government.

To support my argument, PLMN knew and started the process of approaching IMF but did not enter into a contract as they did not want to loose political capital and left it for the next government.
They tried to devalue rupee but stopped fearing public outcry.

Our country was suffering from severe economic crisis, not seen by any incoming government in history.

Boom and bust is fine, it's just a consequence of fluctuations in economic conditions. My objection was to the use of the word 'artificial'. To say that bad policy was malicious and not just stupid or misguided is a big step, and I don't agree. Based on my assessment it was stupidity.

By the way the IMF thing actually doesn't support your argument, it supports the opposite. They knew to go to the IMF. If they really wanted to cause a crisis, they would have made no preparations to go to the IMF. Along the same reasoning when PTI came in, my only issue with their early performance was that they waited too long before committing to an IMF bailout .

 

[Patriot forever]

I disagree, do you know what it means to ‘print money’? Or how it is done? Please show me money supply growth during that period, and point out wherever it is you think the government printed money.

Money creation is done through the banking system NOT through the fiscal channel. This is basic economics. Also, the main effect of money supply growth besides increased output is large increases in prices. Here’s a basic if not completely realistic relationship:



(I don't completely agree with this theory, but even so, its predictive effects are usually valid given a few constants and assumptions).

Secondly, here's Pakistan's money supply (M3) over the last 10 years:

View attachment 696304

The growth in that era was steady, no big spike. In fact, the only real spike has come recently. And if your theory about money printing for fiscal stimulus and spending were true (it certainly isn't true), then the effect on inflation in that era would be opposite of what was actually observed. The inflation rate was decreasing steadily throughout those years.

CAD grew because our import bill grew. When you try and actively grow the economy beyond the means with which it can manage sustainably, by employing policies like overvaluing PKR. You make imports much cheaper and exports less competitive, this may lead to lower inflation and higher temporary purchasing power, and therefore consumption driven growth. We were also importing quite a lot more due to CPEC, including machinery and capital.

All together it was these policies that cased CAD. It has nothing to do with money printing etc.

Yes I fundamentally agree with your points. But seeing a graph is like comparing apples and oranges.

In the initial period of this government the graph is following the same trajectory, not because of direct injection/spending ( which leads to GDP growth) but due to increase in interest rate by SBP and went mostly for interest payment on debt (interest was raised in accordance with inflation).

The end spike is due to corona virus stimulus package, which resulted in high budget deficit. It was necessary as without it the damage to local economy would be irreversible.


Just want to add, the growth if not attained on macro economic stability is always temporary and would disappear/reverse the moment you stop the artificial stimulus ( in this case it was rupee overvaluation).

 

[Jungibaaz]

Yes I fundamentally agree with your points. But seeing a graph is like comparing apples and oranges.

In the initial period of this government the graph is following the same trajectory, not because of direct injection/spending ( which leads to GDP growth) but due to increase in interest rate by SBP and went mostly for interest payment on debt (interest was raised in accordance with inflation).

The end spike is due to corona virus stimulus package, which resulted in high budget deficit. It was necessary as without it the damage to local economy would be irreversible.


Just want to add, the growth if not attained on macro economic stability is always temporary and would disappear/reverse the moment you stop the artificial stimulus ( in this case it was rupee overvaluation).

The chart I posted wasn’t actually in reply to your comments, but yes you have read it correctly. My purpose was to show that money supply growth was well managed and no money printing was used as some form of monetary stimulus.

OT: One of the biggest lessons from this latest crisis should be the importance of central bank independence. Which is practised everywhere in the world, and guarded with utmost importance. It should be codified in our laws that SBP operates without political interference, and SBP should be given a strict mandate of sustaining price stability, with secondary considerations of output. Finance ministers and governments should have no say.

 

[ziaulislam]

I disagree, do you know what it means to ‘print money’? Or how it is done? Please show me money supply growth during that period, and point out wherever it is you think the government printed money.

Money creation is done through the banking system NOT through the fiscal channel. This is basic economics. Also, the main effect of money supply growth besides increased output is large increases in prices. Here’s a basic if not completely realistic relationship:



(I don't completely agree with this theory, but even so, its predictive effects are usually valid given a few constants and assumptions).

Secondly, here's Pakistan's money supply (M3) over the last 10 years:

View attachment 696304

The growth in that era was steady, no big spike. In fact, the only real spike has come recently. And if your theory about money printing for fiscal stimulus and spending were true (it certainly isn't true), then the effect on inflation in that era would be opposite of what was actually observed. The inflation rate was decreasing steadily throughout those years.

CAD grew because our import bill grew. When you try and actively grow the economy beyond the means with which it can manage sustainably, by employing policies like overvaluing PKR. You make imports much cheaper and exports less competitive, this may lead to lower inflation and higher temporary purchasing power, and therefore consumption driven growth. We were also importing quite a lot more due to CPEC, including machinery and capital.

All together it was these policies that cased CAD. It has nothing to do with money printing etc.


Boom and bust is fine, it's just a consequence of fluctuations in economic conditions. My objection was to the use of the word 'artificial'. To say that bad policy was malicious and not just stupid or misguided is a big step, and I don't agree. Based on my assessment it was stupidity.

By the way the IMF thing actually doesn't support your argument, it supports the opposite. They knew to go to the IMF. If they really wanted to cause a crisis, they would have made no preparations to go to the IMF. Along the same reasoning when PTI came in, my only issue with their early performance was that they waited too long before committing to an IMF bailout .

IMF and everyone is wrong?
..the first and probably the only thing they ask the government is not to print notes or do state bank lending ..

the only variable that has been consistent through out this period has been state bank lending..

t

 

[Death Professor]

And will be done again in 2028..

why?

Ishaq hassan predicted it in early 2017

Ashfaque Hasan? I don't take everything he says seriously. He was of the opinion not to go to imf ever. For going late dollar hit 160, wonder what would have happened if we never went to imf?

 

[Neurath]

How bad? Exports and current account surplus is continuously going up?View attachment 696060View attachment 696061

They can not handle facts and figures.
Thing is Pakistan's economy is going up and it is going up the right way.

 

[RoadRunner401]

You keep reposting the exact same things again and again but you yourself don't understand and worse thing is that to you whoever is critical of IK and PTI's awful performance over the past 2+ years has to be a PPP/PML supporter.

CAS/CAD etc. are inconsequential if the growth of the economy is on the right track; let me explain this too, if your CAD is being offset in some other way such as remittances then there is nothing to panic about...….infact, even if you have to take loans to offset the CAD which is there because of your larger imports of machinery, equipment and raw material that you need to establish an industrial base which you would eventually cut back into CAS when that industry start manufacturing and exporting then it is not a BAD deal. It takes time, patience, stability and unity.

Ideally, the country would have a CAS, more exports as opposed to more imports and savings in the form of surplus and remittances. However, if our remittances are sufficient to offset the CAD then there is no need to panic, especially if it keeps a stable PKR->USD conversion rate, that too in favor of Pakistan and keeps the reserved healthy. You keep posting about the condition of the economy when PTI came to power but conveniently leave out the state of economy when PML came into power; and you write-off the conditions of Governance where this PTI Government is neither constricted by the establishment nor the over-zealous judiciary which was a routine for PML from dharnas right from the word go to daily suo-moto notices to ministers to overt establishment moves against the Government etc.

However, you are more interested in insults and abusing people rather than to discuss anything logically and factually. And if you cannot be impartial, in favor of Pakistan, then there is no point in discussing anything at all!

Oh, so if it wasn't for PML_N appointed judges and PML_N senators standing in the way of PML-N government Pakistan wouldn't have been bankrupt.. It all makes sense now!