Exports have increased by 24% in rupee terms

[ajpirzada]

What are we discussing jobs here?
Current account deficit has continued acted due to modest growth in exports (2-3%) and incredible growth in remittances

as i said, if you only care about exports for the sake of earning dollars then I agree with you.

but for me exports are important for other reasons as well. Job creation, industrialisation etc. My issue is with commentators arguing that devaluation has not increased exports which is wrong.

 

[xyxmt]

This policy is to bring dollars in country as we have to payback loan in dollars and not in rupees.

you dont have capacity to bring more dollars, you only have capacity to produce X now you can sell X for $1.00 or sell X for $0.75, again you major exports are cotton, rice, sugar and wheat, towels and bed sheets (not too much value addition in there), you only have certain amount of commodities now you can give one tons for a $1.00 or 0.75 cents its your choice

 

[ajpirzada]

what white men taught you is good for them not for you, well lets bring rupee down to 200 and more prosperity for Pakistan and IMF will give extra bonus of 6 billion on this achievement because now they will get 2 tons of rice for same $$$.

It is going to fall anyways if you dont shift your economy towards exports. All east asian economies did so.

you dont have capacity to bring more dollars, you only have capacity to produce X now you can sell X for $1.00 or sell X for $0.75, again you major exports are cotton, rice, sugar and wheat, towels and bed sheets (not too much value addition in there), you only have certain amount of commodities now you can give one tons for a $1.00 or 0.75 cents its your choice

or you can start selling in greater quantity, hire more people, use extra Rs355bn to increase capacity and keep progressing.

 

[forcetrip]

what white men taught you is good for them not for you, well lets bring rupee down to 200 and more prosperity for Pakistan and IMF will give extra bonus of 6 billion on this achievement because now they will get 2 tons of rice for same $$$.

How does artificially making the rupee stronger work to making the 2 tons of rice cheaper? If the rupee is losing value it is because noone wants it. You have to pay to make it stronger. Paying for it when you do not have money makes you borrow money. Thats where IMF comes in. IMF does not want to pay for you to live in Disneyland. It wants you to use that devaluation edge and stop living beyond your means by exporting more and importing less. Unfortunately noone has learned how to do that in a responsible way.

 

[xyxmt]

How does artificially making the rupee stronger work to making the 2 tons of rice cheaper? If the rupee is losing value it is because noone wants it. You have to pay to make it stronger. Paying for it when you do not have money makes you borrow money. Thats where IMF comes in. IMF does not want to pay for you to live in Disneyland. It wants you to use that devaluation edge and stop living beyond your means by exporting more and importing less. Unfortunately noone has learned how to do that in a responsible way.

that is not the issue, the issue is you are devaluing your currency for the wrong reason. If the objective is to bring more dollars then you produce more export more, concentrate of higher yields not just devaluing your currency. you are not concentrating on producing more but just devaluing which will produce -ve results. the side effect now your imports will be much higher, you debts just went up 24%.

 

[VCheng]

that is not the issue, the issue is you are devaluing your currency for the wrong reason. If the objective is to bring more dollars then you produce more export more, concentrate of higher yields not just devaluing your currency. you are not concentrating on producing more but just devaluing which will produce -ve results. the side effect now your imports will be much higher, you debts just went up 24%.

No problem, just mention the debt in dollars and the exports in rupees. Problem solved.

 

[CrazyZ]

The key to this whole thing has been exports. Low end manufacturing, in particular garments must be increased. Capitol requirements are low for this. With the recent devaluations our labor costs may now be lower than many other nations. There will be belt tightening domestically and it may take a few years to see the results. We can't just put a band aid on it and move on...that's what previous admins did. With the domestic security situation vastly improved it's time to press an increase in exports.

 

[Progressive Conservative]

How can you blame PTI for currency devaluation? The state bank was burning through its reserves trying to keep the currency at an artificially high level. Even if that moron Ishaq Dar was still finance minister, he would have also been forced to let the currency sink.

Pakistanis have a very weak grasp of macro-economics. The currency needs to drop to rebalance the economy. Complaining about rising costs of imports? That's the whole point. The amount of imports needs to go down drastically, which can only happen if the costs of those imports goes up.

Rebalancing an economy, especially one which is as much of a mess as Pakistan, will be painful and will require tough decisions. Those decisions were not made over the last 2 decades and now PTI will have to take them, and hence receive flack from people who are economically illiterate.

If you want to see visually how much of a mess Pakistan's economy is in, just look here: https://atlas.media.mit.edu/en/profile/country/pak/. Then compare the picture to India, Bangladesh etc..

 

[VCheng]

Pakistanis have a very weak grasp of macro-economics. The currency needs to drop to rebalance the economy. Complaining about rising costs of imports? That's the whole point. The amount of imports needs to go down drastically, which can only happen if the costs of those imports goes up.

Ordinarily, that would work.

With Pakistan, the price of the imports does indeed go up - in rupees. Which means that the hard currency remittances still have the same purchasing power for the families receiving those remittances, the net result being that they are insulated and still drive import demand while the local earners cannot afford what they used to be able to do.

 

[ajpirzada]

that is not the issue, the issue is you are devaluing your currency for the wrong reason. If the objective is to bring more dollars then you produce more export more, concentrate of higher yields not just devaluing your currency. you are not concentrating on producing more but just devaluing which will produce -ve results. the side effect now your imports will be much higher, you debts just went up 24%.

We are producing more... that is the whole point

see table 5.5 on page 68 here: https://bit.ly/2FUtXOe . The quantity of exports have gone up for value added textile sector. Total quantity of exports have increased as well. See the column for 'Quantum Impact.'

We cannot start competing with other countries while keeping our price high. We need the price advantage to start competing against Bangladesh, Vietnam and other similar exporters. Also, we cannot just start producing high value added stuff. We need to start with what we have and take it from there.

exports in rupees

in quantity... it is how much we are producing in quantity which matters for job creation, capacity expansion etc.

 

[VCheng]

in quantity... it is how much we are producing in quantity which matters for job creation, capacity expansion etc.

In other words, producing more and and working harder for the same amount of foreign exchange - the whole point of exports - or am I not getting it right?

Job creation is good, but the exporter has to account for the increase in costs of any import inputs into his/her overall mix, including payroll. Instead of 100 people being paid, we now have 125 people being paid the same in rupees (a larger payroll for the exporter) but the buying power of those rupees has been reduced for their families to live on, while the exporter's imported inputs require more rupees to obtain.

I must be missing something here.

 

[KhanBaba2]

If this was true, Zimbabwe would have more industrialization than China

 

[Imran Khan]

lets de value rupee to 500=1usd may be our exports then reach to 200bn$

 

[forcetrip]

that is not the issue, the issue is you are devaluing your currency for the wrong reason. If the objective is to bring more dollars then you produce more export more, concentrate of higher yields not just devaluing your currency. you are not concentrating on producing more but just devaluing which will produce -ve results. the side effect now your imports will be much higher, you debts just went up 24%.

So we just make industries which are not profitable because importing those things cost less? A country of this size and laziness will only have a shot when importing something is way more expensive giving a shot to local industry to flourish because of less options. Right now your produce and imported has very little difference in price. It sounds horrible to me but if I am willing to sacrifice buying substandard local products to give my children a better chance of survival in this country then you should pray for that these local industries give us better standards and quality in the next 2 decades. There is no improving the utter destruction inherited to this economy in the next 2 to 3 years unfortunately.

 

[valkyr_96]

lets de value rupee to 500=1usd may be our exports then reach to 200bn$

You are making jest of an issue that requires careful calibration.