Macro Bites

Macro Bite # 84

2 min read
Have you ever set out to do something with the right intentions, only to see things backfire because you chose the wrong time? If so, you may be able to give some advice to Prime Minister Imran Khan, who ended up in Russia the same day the country began its invasion of Ukraine.
While the timing of the visit turned out to be unfortunate in hindsight, in the bigger picture, its scheduling was understandable. Following the US withdrawal from Afghanistan, the country’s relationship with Pakistan has grown distant. So, it makes sense that Pakistan has sought to build relationships with other major countries. In the case of Russia, it is no coincidence that PM Khan visited the world’s largest natural gas exporter at a time when Pakistan is increasingly energy-starved. Indeed, one of the reasons for the visit was to make progress on a gas pipeline that is meant to run from Karachi to north Punjab, and was going to be built with technical and financial assistance from Moscow.

At the same time, PM Khan’s visit to Russia at this unfortunate time carries the risk of aggravating countries that we still rely on tremendously. Annually, Pakistan receives more than USD 5 billion in remittances from the US, UK and the EU. By contrast, remittances from Russia are likely in the tens of millions, so low that the State Bank does not even categorise them by country. Meanwhile, 55% of Pakistan’s exports go to the US, UK, EU or Canada. Only 9% go to China and Russia combined.

Thus, it is vitally important that Pakistan carefully navigates this diplomatic tightrope. Because, quite frankly, we cannot afford to pick sides.

WEEKLY DATA WATCH

KSE-100 fell this week, as the Ukraine crises caused turmoil in international markets. PKR also depreciated this week, as oil prices rose due to the invasion of Ukraine. Local gold prices rose this week.

Increase in prices of Chicken (+14.5%) and Tomatoes (+3.63%) contributed to weekly inflation. A fall in the prices of Potatoes (-2.00%) and Onions (-2.63%) helped moderate inflation this week.

The annual change in Sensitive Price Index fell to 15.90% vs. 18.09% last week. The poorest of the country (Q1) experienced a change of 12.33% vs. 17.34% for Q5. On a weekly basis, prices rose for all quintiles by 0.51%.

What Else We’re Reading (Local)

  • The Pakistan Super League has been tremendously profitable, but not necessarily for the franchise owners. (Profit)
  • In an effort to get around international sanctions, Pakistan plans to begin barter trade with Afghanistan and Iran. Mesopotamia would be proud of us.  (Dawn)

What Else We’re Reading (International)

  • You may have heard of plant-based meats, but what about the world’s first plant-based Covid vaccine? No seriously. (Bloomberg)
  • The war in Ukraine is set to exacerbate the global supply chain and commodity crisis. (WSJ)

Asad Pabani

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

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