Patriot forever
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This is probably the most important revelation about the state of Pakistani economy that I have read in past 12 months. So it appears that we cannot even tolerate the increased GDP expansion because even current all-time-high foreign reserves are not enough to absorb the burden of imports when economy is growing faster than 5.5%.
I have heard many economic experts & state official stating on record that Pakistan only need foreign reserves to cover the imports for 6 months.
After what happened with the spike in crude oil prices in 2008 and recent spike in economic growth proves that Pakistan needs foreign reserves at least amounting to 1/3 the size of her GDP. The outdated economic theory of Zia time of maintaining of foreign reserves to cover only 6 months worth of imports is just not good enough.
6 months of reserves is a very healthy indicator. Wish we had that kind of reserves.
The idea of sustainable growth is we don't have to come to the point of using considerable reserves to sustain growth, otherwise no matter how much reserves we have we will run out of it sooner or later. That's what the 5.5% is indicating. ( In these circumstances with this level of international commodity inflation I would rather say 4 to 4.5, but this is temporary). In the medium term yes with our current export and remittances projections he is right. In the long term if we keep on this path we can grow further. ( Before we reach the plateau where we would need massive input to achieve minimum growth but we are a couple of decades away from that point where developed countries are where the focus is transferred to cutting edge innovation and sophistication).
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