Pakistan’s current account deficit shrinks massive 73% in July

[Yaseen1]

There is also a word call stability. When you don't have enough resources to plug the gaps, trade deficit and current account deficit are killers.

In case of Pakistan, it is devastating, because we have to borrow to plug the gap. Borrowing due to meager resources is becoming harder and harder and tougher and tougher. As you may have noticed, IMF put hurdles, conditions, which results increase in commodities prices, causing hard aches to the poorest in the country.
No way current account deficit is a good thing for Pakistan in current situation.
If you notice even though it says that the deficit stands just over $ 500 million. But if the graph has something to go buy, it is almost wiped off.

Imports $4.1 billion = Exports $ 2.2 billion + Remittances $ 2 billion. This means the account stands a little bit in positive according to the figures in the graph.

Decrease in cad is good when other factors are positive like more industrial growth ,decrease in poverty and inflation,lowering of unemployment ,improvement in education system and literacy rate and rise in foreign investment .What about increase in deficit resulting from import of industrial machinery and raw materials for production of value added products.When you decrease cad by making your public poor and lowering real growth and decreasing literacy rate amd foreign investment then it is a temporary meaeure which will result in keeping you much behind rest of world .

 

[Code_Geass]

Exports needs to improve otherwise rupee camt be stable..
Hopefully fta 2 with china gets implemented soon and ee can do some sort of fta with us as well

 

[AsifIjaz]

I was in pakistan for eid and i did get an opportunity to go shopping and even did groceries with mom and family. One thing tht is clear is tht the new taxes have just not affected the ones who have or even the upper middle class buying preferences.
The stores are loaded with imported stuff, not tht we cant or dont produce them locally ... Its just our obsession with imported stuff, our habit and the bragging rights for buying imported or something u get abroad. We have quite a few chronic show offs.
Government thus needs to tax more the edibles or snacks which are abundantly produced in pak. same way it makes no sense to allow towels, prayer mats, leather belts, cutlery, jeans, shoes etc to be imported to pakistan when we produce good ones too.. Hence tax the imported ones more.
The exports will take time to pick up especially considering the fact the decades old factory owners are worried about declining profits bcoz they now need to pay taxes and thus are in a state of hibernation. So in the meanwhile a bird's eye view of the market shoukd provide more relief to the CAD..

 

[ziaulislam]

I was in pakistan for eid and i did get an opportunity to go shopping and even did groceries with mom and family. One thing tht is clear is tht the new taxes have just not affected the ones who have or even the upper middle class buying preferences.
The stores are loaded with imported stuff, not tht we cant or dont produce them locally ... Its just our obsession with imported stuff, our habit and the bragging rights for buying imported or something u get abroad. We have quite a few chronic show offs.
Government thus needs to tax more the edibles or snacks which are abundantly produced in pak. same way it makes no sense to allow towels, prayer mats, leather belts, cutlery, jeans, shoes etc to be imported to pakistan when we produce good ones too.. Hence tax the imported ones more.
The exports will take time to pick up especially considering the fact the decades old factory owners are worried about declining profits bcoz they now need to pay taxes and thus are in a state of hibernation. So in the meanwhile a bird's eye view of the market shoukd provide more relief to the CAD..

People /middle & upper class think buying expensive subsidised(by overvalued rupee) imported material is fundamental right ..this behavior is causing the poor class to suffer

 

[Yaseen1]

no one (from out side of Pakistan) will hand over dollars for rupees. only way for Pakistan to get dollars from abroad is to swap goods, services, assets etc.

If you go to money exchange companies in Pakistan you will always find large no of dollars and I am unable to understand when our govt is short of dollars reserves from where this dollar is coming.Foreign investment is also needed along with increase in exports if we want dollars inflow but it has decreased much in this year which is a matter of concern for Pakistan economy

I was in pakistan for eid and i did get an opportunity to go shopping and even did groceries with mom and family. One thing tht is clear is tht the new taxes have just not affected the ones who have or even the upper middle class buying preferences.
The stores are loaded with imported stuff, not tht we cant or dont produce them locally ... Its just our obsession with imported stuff, our habit and the bragging rights for buying imported or something u get abroad. We have quite a few chronic show offs.
Government thus needs to tax more the edibles or snacks which are abundantly produced in pak. same way it makes no sense to allow towels, prayer mats, leather belts, cutlery, jeans, shoes etc to be imported to pakistan when we produce good ones too.. Hence tax the imported ones more.
The exports will take time to pick up especially considering the fact the decades old factory owners are worried about declining profits bcoz they now need to pay taxes and thus are in a state of hibernation. So in the meanwhile a bird's eye view of the market shoukd provide more relief to the CAD..

Pakistan produced edibles are mostly of poor quality except those produced by multinationals like Nestle so we need to improve quality to reduce demand of imported products.Clothing and other items produced in Pakistan as you mentioned are of good and satisfactory quality and there is no reason for us to buy such imported products

 

[tkmd]

This is not a problem of imports. It is a problem of exports. You think they don't eat nutella in Dhaka? Or buy Honda SUVs? But the difference is they also export 50 billion in goods (vs 24 billion for us).

I am not impressed at all by PTI boasting about slashing imports. That was easy. Devalue the rupee, slash subsidies, jack up rates for price controlled goods and slap on massive tariffs. What is STILL missing is a coherent long term industrial economic policy to quadruple our exports. Not holding my breath.

 

[B.K.N]

It is a problem of exports.

Why you don't produce something to export Mr economist
And government is not doing this to impress you but for the betterment of Pakistan

 

[crankthatskunk]

Decrease in cad is good when other factors are positive like more industrial growth ,decrease in poverty and inflation,lowering of unemployment ,improvement in education system and literacy rate and rise in foreign investment .What about increase in deficit resulting from import of industrial machinery and raw materials for production of value added products.When you decrease cad by making your public poor and lowering real growth and decreasing literacy rate amd foreign investment then it is a temporary meaeure which will result in keeping you much behind rest of world .

Well, it is the responsibilities for the government to reduce the imports of the goods which are of consumers items rather than those on which value can be added by further processes i.e. converting them for finished products, either for internal consumption or export.
Similarly, the aim should be to give incentives to the local companies and foreign companies to install plants and machinery to produce most of the imported items locally.
I am certain many of the consumption items could easily be produced locally and could also be exported.
If Vietnam and BD can do it, so can we. But to do that lots of reforms needed in Pakistan.
First thing Pakistan should do is to find a way to get rid of the contracts for the production of electricity signed by PPP and PMLN. They are the main reason why the energy costs are so high in Pakistan, which has dragged the industry in Pakistan down and handed over the advantage to BD.
Who is going to do the long term planning!! This is the question.

 

[War Thunder]

bruh.... it is because of low purchase power possibly because of higher foreign currency rates...

And why else will they devalue the currency? But you folk will find an excuse to support your thug brethren no?

 

[TopCat]

Well, it is the responsibilities for the government to reduce the imports of the goods which are of consumers items rather than those on which value can be added by further processes i.e. converting them for finished products, either for internal consumption or export.
Similarly, the aim should be to give incentives to the local companies and foreign companies to install plants and machinery to produce most of the imported items locally.
I am certain many of the consumption items could easily be produced locally and could also be exported.
If Vietnam and BD can do it, so can we. But to do that lots of reforms needed in Pakistan.
First thing Pakistan should do is to find a way to get rid of the contracts for the production of electricity signed by PPP and PMLN. They are the main reason why the energy costs are so high in Pakistan, which has dragged the industry in Pakistan down and handed over the advantage to BD.
Who is going to do the long term planning!! This is the question.

Your main problem is terrorism and reputation. Move on from Kashmir obsession. Close Afghan border. Ask ISI to stand down and stop producing terrorist.
You should apply the medicine where the wound is. Reform and lab lab la... will not help

 

[Aasimkhan]

bruh.... it is because of low purchase power possibly because of higher foreign currency rates...

So ? isnt it good for the country that people are spending less on imported goods ?

Just watch how every idiot with grade 5 economics class back ground will comment and try to find fault with this excellent news .
Anyways economy is going in the right direction for sure and it will be at least a year more worth of painful adjustment before we reach all clear.

Reduction in import if happening in consumer goods part is good but if it involves raw material, machinery etc then it could reflect slow domestic demand and less industrial activity. We have to be careful with that.

My office runner has 22000 PKR per month salary but he carries a phone worth 40000 PKR. I asked that idiot why has he spent 2 moth salary on a phone he said "Sir society main zinda bhi rehna hai". Every idiot is living beyond his means

 

[Jungibaaz]

Had painful measures to reign in excesses and stabilise current account bleed been had earlier, we might not have needed an IMF bailout today and we might well have had more room for sustainable GDP growth north of where forecasts are now.

Anyway, these are steps in the right direction. Proper tax collection, infrastructure development and capital formation, reduction in imports and related subsidises, and building exports will allow for a much better economic growth engine to be realised 5-10 years from now. I hope this government breaks the usual cycle of binge and excess followed by an election and a bailout. If BD can do it, so can we.

 

[Affan-khan]

excellent work is going specially against those smugglers also called "carry" and corrupt custom officers. Previously a week is required to clear your imports from port. Now it took me just 8 minutes without any payment to officers for early release. People who are paying their taxes previously are happy and Thieves of this economy are crying finally.

 

[Aasimkhan]

excellent work is going specially against those smugglers also called "carry" and corrupt custom officers. Previously a week is required to clear your imports from port. Now it took me just 8 minutes without any payment to officers for early release. People who are paying their taxes previously are happy and Thieves of this economy are crying finally.

i agree. Black economy guys are weeping.

 

[Wikki019]

Your main problem is terrorism and reputation. Move on from Kashmir obsession. Close Afghan border. Ask ISI to stand down and stop producing terrorist.
You should apply the medicine where the wound is. Reform and lab lab la... will not help

Why don't you give your land as swamy has asked for to India and live happily after?

This is not a problem of imports. It is a problem of exports. You think they don't eat nutella in Dhaka? Or buy Honda SUVs? But the difference is they also export 50 billion in goods (vs 24 billion for us).

I am not impressed at all by PTI boasting about slashing imports. That was easy. Devalue the rupee, slash subsidies, jack up rates for price controlled goods and slap on massive tariffs. What is STILL missing is a coherent long term industrial economic policy to quadruple our exports. Not holding my breath.

Have you read the article?