Macro Bites

Macro Bite # 67

2 min read
Last week’s newsletter discussed our import bill, and the misguided perception that our imports primarily consist of luxury goods. A new World Bank report confirmed this, pointing out that non-essential goods only make up about 10% of our import bill. Hence, introducing duties and other regulatory measures are unlikely to curb our import bill much. Instead, if we want to reduce our trade deficit, our focus should be on boosting our exports.
So how do we improve our export numbers? The report had some recommendations. The first was gradually reducing import tariffs so that firms focus less on a captive domestic market and instead try to increase their exports. Second, reallocating export financing from short-term working capital to longer-term capacity expansion. Thirdly, providing market intelligence services for potential exporters to help them find the right market and specifications for their products. Finally, devising long term strategies to enhance competition and innovation amongst exporters to boost their productivity.
As I noted last week though, initiating such deep-rooted structural reforms is much more difficult than simply making faux-populist statements. Whether our government has the appetite to take such steps remains to be seen.

WEEKLY DATA WATCH

KSE-100 rose this week, as Pakistan’s USD 4.2 billion loan from Saudi Arabia enhanced investor sentiment. PKR also appreciated this week, due to the Saudi loan boosting foreign reserves. Local gold prices rose this week too.

The annual change in Sensitive Price Index fell to 14.31% vs. 14.48% last week. The poorest of the country (Q1) continue to bear the brunt of increased prices, with a change of 15.01% vs. 14.97% for Q5. On a weekly basis, prices rose for all quintiles by 1.23%.

Increase in prices of Tomatoes (+11.4%), Sugar (+3.74%) and Potatoes (+6.05%) contributed to weekly inflation. A fall in the price of Onions (-5.49%) and Bananas (-3.51%) helped moderate inflation this week.

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What Else We’re Reading (Local)

  • After the spectacular success of the Pakistan Super League, is it time to consider a women’s PSL? (Profit)
  • Pakistan and Germany signed a treaty to suspend debt servicing of EUR 26 million (Dawn)

What Else We’re Reading (International)

  • Qatar is investing in Pakistan’s new LNG terminal, as demand for the fuel is expected to grow rapidly in the country in the coming years. (Bloomberg)
  • India tested a new missile capable of reaching Beijing, as tensions escalate between the two neighbours. (WSJ)

Asad Pabani

Journalist, researcher and documentary filmmaker. Prior works featured in Dawn, Soch Videos and Pioneers Post.

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