Current Account Records A Huge Surplus of Over $800 Million in July-Aug 2020

[Syed1.]

Finally i can see forex reserves crossing 30bn$ ?

Time lagayga.... 3-4 saal atleast

 

[Jungibaaz]

I pointed this out on PDF at the start of the crisis. Our exports were low (as a percentage of GDP), tourism isn't a big industry in Pakistan, our private sector debt was low, and government was focused on economic competitiveness to boost exports. Pakistan was braced for impact due to the BOP crisis before the pandemic that hurt others much more.

The hard part is now. Investing gains for future growth. Investing gains for long term growth. We done a bad job on this after previous BOP cycles. We have preferred to burn the forex and boost growth through import based consumption and head back to the IMF. We must break the cycle.

Absolutely and fully agree. My only concern at the start was what impact the pandemic would have health wise, and how Pakistan could stop a huge number of cases overwhelming health services, but that's been much less serious than one might have predicted given how early impacted countries were looking.

 

[Jungibaaz]

Finally i can see forex reserves crossing 30bn$ ?

Inshallah, if the current track remains, sometime after the next election it is possible. The current government has to remains steadfast, there will be a lot of pressure on them to burn some reserves and relax policies in order to win public support, they should not make the same mistakes the previous govt did. The key is to have a sustainable and well managed increase, after that much better targets can be set.

 

[Romeoo250]

Insha Allah we will be fine with Imran khan government.

 

[Chakar The Great]

I don't want to sound pessimistic but its small surplus.

We can only be comfortable when our foreign reserves cross minimum of US$ 30 Billion. I hope that happens by 2023. Prior to next election.


Lot of hope from CPEC phase-2. Don't know when would the industries start production.

 

[Mrc]

Finally i can see forex reserves crossing 30bn$ ?

If govt manages to keep this discipline than defenitely

 

[volatile]

Exports stagnant (Actually dropping) .Import reduced first crude prices ,second with curtailment of raw materials . Remittances increased due to people returning back from ME and devastating economic impact resulted in additional amount being sent .

Remittance Boom Is Turning Into a Bust for Asia Emerging Markets

Migrant workers from Asia’s developing countries have managed to send home record amounts of money in recent months, defying pandemic expectations and propping up home economies at a critical time.

t.co

Remittance Boom Is Turning Into a Bust for Asia Emerging Markets
so great performance

 

[Dr-who]

That is the worst logic I've ever seen.

Less trade, less travel & higher remittance
So decreased travel has led to narrow service defecit

 

[The Accountant]

First off, I'm no blind partisan, where this government is doing what's right, I have backed them.

Secondly, this surplus is good I agree, but we're in a covid crisis right now. Surpluses and smaller deficits are being had everywhere, quite a few countries are recording record surpluses. The reason for this is not necessarily good. It could be that exports are barely growing, while imports have decreased and their prices have fallen. Take this article as an example from Vietnam, see what experts there say about their record surplus. Also a shrinking import bill on the back of very little or no growth is a sign of concern, not something to immediately celebrate. I explained the possible dynamics behind this in this post here.

Here are some examples of me backing this PTI government when they were right on the policies needed to mitigate the current account crisis we had:







And there are even examples of me criticising the state of the economy well before the election and some policy decisions that I thought were wrong from PML. So as I said, I am no blind partisan, thanks.

Back to the subject at hand. Even so with this surplus, let's not celebrate too soon, covid crisis is not over. Our previous financial crisis might be drawing down thanks to some tough but necessary measures taken by this government, but we are not there yet. And also, our economy is not right now built to sustain surpluses. Healthy surpluses come from booming exports, not starving yourself of imports.

Good we should appreciate the good moves and critisize the mistakes.

Here i would like to disagree with u that reduction of import is not a good sign. The reduction of import is coming mainly on account of less imports of consumeable items. This import is slowly and gradually being replaced by local manufacturing. The goods that used to be cheaper to import then manufacture locally are now become competitive so local manufacturers are getting better profits now

 

[The Accountant]

Exports stagnant (Actually dropping) .Import reduced first crude prices ,second with curtailment of raw materials . Remittances increased due to people returning back from ME and devastating economic impact resulted in additional amount being sent .

Remittance Boom Is Turning Into a Bust for Asia Emerging Markets

Migrant workers from Asia’s developing countries have managed to send home record amounts of money in recent months, defying pandemic expectations and propping up home economies at a critical time.

t.co

Remittance Boom Is Turning Into a Bust for Asia Emerging Markets
so great performance

Any basis of your conclusion ? Fuel prices r low agreed but so are the other commodities. Prices of all the products specially textile is low. Many big garment retails chain got bankrupted in such a situation means job very well done

 

[Wikki019]

Finally i can see forex reserves crossing 30bn$ ?

I don't think so, we have to wait till Covid dusts settles down and then we will see how much exports will grow as compared to imports.

 

[Jungibaaz]

Good we should appreciate the good moves and critisize the mistakes.

Here i would like to disagree with u that reduction of import is not a good sign. The reduction of import is coming mainly on account of less imports of consumeable items. This import is slowly and gradually being replaced by local manufacturing. The goods that used to be cheaper to import then manufacture locally are now become competitive so local manufacturers are getting better profits now

If that’s the case, then I agree. However I’m not aware at this time what the breakdown is of which imports have been reduced. I assumed that it was largely just the effect of low prices and low demand.

 

[Chhatrapati]

However I’m not aware at this time what the breakdown is of which imports have been reduced. I assumed that it was largely just the effect of low prices and low demand.

At this point, any major economy except maybe China, posting a surplus is never a good sign. Unless the export grew in double digit and the import is at a state before Feb 2020. I've seen many in here jumping up and down seeing India posting a surplus after 10-20 years, but didn't realize it's the worst economic hit in 70 years mainly due to demand glut in Jewelry and oil. As soon as it's reversed the deficit went positive.

 

[RIP Pak LAW]

Actually no Hajj this year saved some money too but nevertheless good development.

 

[volatile]

kindly read the article these all are temporary measures

Any basis of your conclusion ? Fuel prices r low agreed but so are the other commodities. Prices of all the products specially textile is low. Many big garment retails chain got bankrupted in such a situation means job very well done