Against heavy odds
August 17, 2022
With the country reaching its 75th anniversary, there has been much doom and gloom as the economy passes through another downturn triggered by its recurring trade imbalance and debt crises. Yet, it is important to remind ourselves that notwithstanding its near-insurmountable challenges, the economy has achieved some remarkable successes — even if it has not realised its full potential.
Pakistan has increased its per capita income from around $100 in 1950 to (a vastly underestimated) $1,750 in 2022. Starting with a non-existent modern manufacturing sector, it has built one up thanks to an earlier generation of dynamic entrepreneurs and traders, many of whom had migrated from India. It today contributes 15 per cent of GDP. Literacy rates have increased from overall 15pc to 70pc for males and 50pc for females, with significant growth in higher education in recent years.
Labels: Faculty, Pakistan Economy, Publications
posted by S A J Shirazi @ 8/17/2022 02:22:00 PM,
Independence Day Celebrations - 2022
August 15, 2022
Senior Faculty, Administrative Staff and Support Staff attend the celebrations. Children and families were also present in the festivities of 75th Anniversary (Diamond Jubilee) of Pakistan’s Independence Day at the Lahore School.
Labels: Independence Day, Lahore School, Pakistan
posted by S A J Shirazi @ 8/15/2022 10:26:00 AM,
Happy Independence Day - 2022
August 12, 2022
Labels: Independence Day, Lahore School, Pakistan
posted by S A J Shirazi @ 8/12/2022 11:24:00 AM,
Launch of the Pakistan Migration Report 2022
July 01, 2022
According to the report, it is unlikely that the surge in remittances witnessed during 2020 and 2021 will sustain. While the shift in inflows from informal to formal channels and the new initiatives during Covid-19 period were able to increase the average monthly inflows to around USD 2,500 million, the impact of these factors has been diminishing and inflows are slowing down. Deteriorating economic conditions and political environment discourages investment-oriented inflows, the report warns that this aspect demands consideration given the over reliance on these inflows.
Dr Amjad emphasized on the need to focus on policies to address challenges of informal remittance inflows and illegal migration. According to previous estimates around 57 percent of remittance inflows are through the informal channels. He also highlighted data constraints and stressed on the need for access to more detailed data for carrying out more rigorous analysis.
Other speakers at the launch ceremony included Dr. Nasra Shah, Coordinator CIMRAD and Professor at GIDS, and Almazia Shahzad, Research & Teaching Fellow at GIDS. Dr. Shah shared the main messages of the report with a focus on migration outflows and governance of migration related SDGs, while Ms Shahzad presented an analysis on remittance inflows and relationship with the macroeconomic situation of the country.
Labels: CIMRAD, Faculty, GIDS, Pakistan Economy, Publications
posted by S A J Shirazi @ 7/01/2022 09:02:00 AM,
Bad macroeconomics
June 28, 2022
Indeed, this lack of understanding has led the economy to move in stop-go economic cycles at regular intervals; in fact, the growth cycles have become more frequent, resulting in the significant lowering of average growth since 1988. Why has this happened?
As to the factors behind the growth slowdown, there is broad agreement — low levels of saving and investment and lack of political will to carry out basic structural reforms to increase revenues, break the stranglehold of monopolies, and foster competition and productivity growth, including the removal of trade barriers. In the absence of reforms, the challenge then is to manage the economy within the resulting structural constraints which impose limits on sustainable growth.
To take an example: in 2008, the economy faced a severe foreign exchange crisis, with strong concerns of default. In came the IMF to suggest a sharp reduction in the fiscal deficit to stabilise the economy. It projected that the economy would slow down after stabilisation measures to 3.5 per cent. In fact, it crashed to 0.5pc with unemployment rising sharply and food inflation standing at 21pc (as subsidies were slashed). This was the worst ‘hard landing’ we had ever witnessed.
The macroeconomic framework under which the budget of the new coalition government has been prepared appears to be suffering from the same malaise. It wanted to match the PTI’s impressive growth performance of near 6pc over the last two years but saner counsel prevailed and it opted to target a growth rate in 2022-23 of 5pc. The government will be lucky if it achieves 3.5pc to 4pc on the current policy package. In all probability, this rate will fall even further after the stabilisation squeeze it has agreed to with the IMF. Inflation, too, will be much higher than the targeted 11.5 pc and may rise to near 20pc in the next six months. Interest rates will rise further. Ambitious revenue targets will dampen growth and cause inflation to escalate.
We are heading for another hard landing. It will take all the finesse the finance minister can muster to get the IMF to soften its stance — which, unfortunately, it rarely does. What it will agree to are additional resources to cushion the impending stagflation in the form of well-targeted direct income support measures through BISP. The government should use these safety nets effectively.
To what extent is the current macroeconomic predicament the result of economic policies followed by the previous PTI government? To be fair to the PTI when it was in government, it handled the Covid-19 pandemic extremely well and cushioned its economic impact — a fact that was internationally recognised. Its economic policies to reignite growth helped revive it to over 5.5pc in 2020-21. Prudently, it targeted a growth rate of just over 4.5pc for 2021-22 to prevent the economy from overheating.
What it did not foresee — as most other countries — was the post-Covid super-consumer boom that was fast unravelling. Early signs of the economy overheating were not picked up by the IMF and World Bank which projected a growth rate of 4pc for 2021/22 — still below the sustainable growth projected by some studies of 4.5 pc.
In fact, the economy grew by near 6pc and the binding economic constraint to sustainable growth — the foreign exchange constraint — had entered with full force. Here, the State Bank of Pakistan must shoulder much of the blame because it allowed the foreign exchange reserves position to fall to precarious levels. Although the central bank had started raising interest rates, its cheap credit policy, which pumped in imports at an alarming rate, had been maintained for too long. The sudden change in government meant a loss of international confidence, even among Pakistan’s close friends, who refused to roll over their deposits. We now face (not for the first time) a full-blown debt repayment crisis, with the dollar rising to unprecedented levels in past weeks, which the new government is desperately trying to douse.
What then are the key lessons to learn so that we can move towards prudent macroeconomic management? First, convince the IMF not to impose prior conditions that will result in a very hard landing and to agree to a gradual and not sudden compression in aggregate demand. Second, have better coordination of the fiscal and monetary policy while respecting State Bank autonomy. Third, and most important, start rebuilding your foreign exchange reserves especially by attracting new foreign investment. In future, draw a red line below which the foreign exchange reserves must not be allowed to fall.
The writer is professor of economics at the Lahore School of Economics and former vice chancellor of the Pakistan Institute of Development Economics.
Published in Dawn, June 17th, 2022
Labels: Faculty, Macro-Economy, Pakistan Economy, Publications
posted by S A J Shirazi @ 6/28/2022 05:37:00 PM,
Federal Budget 2022-23
June 10, 2022
Pakistan Economic Survey 2021-22
Labels: Budget, Economic Survey
posted by S A J Shirazi @ 6/10/2022 09:35:00 AM,
Farewell MBA 2022
May 16, 2022
The function was held after a hiatus of a couple of years due to the impact of Covid, and thus there was a lot of excitement amongst the graduating classes. And the three sections of the MBA cohort who presented on stage did not disappoint the audience.
Labels: Farewell, Lahore School, MBA, Mphil
posted by S A J Shirazi @ 5/16/2022 02:23:00 PM,
Strategic Management
April 29, 2022
Mr. Qasif Shahid, CEO at Finja Lending Services (Ltd.) with studemnts of Lahore School of Economics on Thursday, April 28, 2022 after giving a talk to BSC IV students who are enrolled in the course of “Strategic Management”.
Labels: Guest Speaker
posted by S A J Shirazi @ 4/29/2022 12:44:00 PM,
Business Policy
Mr. Khurram Javaid, Head of Marketing & Sales at Fauji Foods (Ltd.) visited the Lahore School of Economics on Thursday, April 28, 2022 and gave a talk to MBA II students who are enrolled in the course of “Business Policy”. He discussed Business opportunities and Market penetrative strategies in depth.
Labels: Guest Speaker
posted by S A J Shirazi @ 4/29/2022 12:40:00 PM,
Analysis of Financial Statements & Reporting
April 27, 2022
Shahzad Saleem, CEO at The Pakistan Credit Rating Agency Limited (PACRA) visited the Lahore School of Economics on Tuesday, April 26,2022 to give a talk to MBA students of “Analysis of Financial Statements & Reporting ”.
Labels: Guest Speaker
posted by S A J Shirazi @ 4/27/2022 11:31:00 AM,
Entrepreneurship and SME Management
Saad Khan, CEO at Active Media visited the Lahore School of Economics on Tuesday, April 26,2022 and gave a talk to BBA IV students who are enrolled in the course of “Entrepreneurship and SME Management”.
Labels: Guest Speaker
posted by S A J Shirazi @ 4/27/2022 10:42:00 AM,
Entrepreneurship and SME Management
April 22, 2022
Mr. Salman Danish, Group CEO at Catalyst Ventures Pakistan visited the Lahore School of Economics on Friday, April 22, 2022 to give a talk to BBA students who are enrolled in the course of “Entrepreneurship and SME Management”.
Labels: Guest Speaker
posted by S A J Shirazi @ 4/22/2022 03:03:00 PM,
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