One is not really aware what prime minister, Nawaz Sharif and his team really wanted to achieve at Davos. Clearly, even if they were paying little attention during the conference, they would have picked up that global leaders these days are busy in making their own respective assessment whether the recent turmoil in international markets isn’t just the product of tremors but rather seismic shifts in the foundational pillars of the global economic system; and that too with highly unpredictable consequences. What if a bunch of eras are ending all at once? An assessment there-on should then logically lead to prudent future policy-making by our economic managers in light of the findings of their selected economic team. But then do we ever do such analysis in Pakistan?

For example, could the over 30 years’ era of China’s high growth be coming to an end? If yes, then this would mean that China’s ability to fuel global and regional growth through its exports and imports would stand compromised. According to Michael Pento’s CNBC analysis, the renminbi’s falling value, cascading Shanghai equity prices (down 40 percent since June 2014) and plummeting rail freight volumes (down 10.5 percent year over year) all visibly illustrate that China is not growing at the promulgated 7 percent, but in fact not growing at all! If accurate, the problem this then presents for Pakistan is that China in all these years accounted for 34 percent of global growth, and the nation’s multiplier effect on emerging markets (Pakistan falling in this bracket) takes that number to over 50 percent, meaning, unless we move proactively and “professionally” the whole CPEC opportunity could suddenly be in danger!

Further, what if the $100-a-barrel oil prices era is truly history? This means that Pakistan’s deep pocket friends may now suddenly need to think the old fashioned themselves and to learn to grow by making those goods and services that are internationally marketable. Meaning, their relevance to us will shift from being our lenders/donors to perhaps our competitors. Last but not least, what happens if the European Union’s (EU) era comes to an end and the USA indeed shifts to the very far right? Both are realistic possibilities: Germany is already threatening other European countries that if they don’t prevent the influx of more refugees into Europe from the Mediterranean and relieve Berlin of the lonely task of housing refugees, Germany could shut its doors. In a poll over the last weekend, majority of Germans want a border fence and if it happens, it could be the end of Europe as we know it today; and in the US on the other hand there is a distinct possibility that Donald Trump could find himself in the White House, which could push America towards fascism resulting in deep national polarization. Both outcomes – if were to happen – would be disastrous for Pakistan, which not only enjoys a duty free marker access to the EU (its largest export market), but also relies heavily on the USA, which happens to be its second largest export market after the EU. As if these emerging international challenges were not steep enough for Mr. Nawaz Sharif’s government, the economic challenges he may be facing at home in the coming months are looking to be no less daunting.

Despite a soft near run inflation outlook, the emerging risks in the form of rapid monetary expansion, a likely depreciation of the Pakistani rupee, and continuing current account weakness, all of these point towards the likelihood that going forward continuing the present monetary-easing cycle may just not be sustainable. Meaning, as money supply gets tighter, the growth is likely to stall further, in a scenario where the government will have to behave more prudently in its borrowing and spending and the private sector will be pushed further in a credit crunch. However, the real looming trouble being that this government has either failed or just chosen to ignore the competitiveness issue of the country with the result being that despite the opportunity of lower oil prices our current account deficit has failed to reduce meaningfully, i.e. the way it should have come down. Exports are falling rapidly while the imports have proven to be rather inelastic despite crashing global commodity prices; low prices have simply resulted in higher unproductive consumption relieving little pressure on the compulsion to maintain higher reserves.

Given the shoddy (economic) governance track-record, even in coming months there is a strong likelihood that higher imports will keep the current account in deficit and the habitual fiscal slippages by the present political leadership, both are likely to keep this government reliant on domestic bank borrowings in a low global growth environment, thus further spiraling the danger of Pakistan falling into a debt trap. As already mentioned, growth and inflation are exhibiting contrasting trends and though agricultural commodity prices of late have somewhat shown a recovery, their level still does not cover the input costs incurred by the farmers. Unless new policies and initiatives are unleashed, that reduce input costs in future for the Pakistani farmer, our agricultural will simply not be able to compete with its international counterparts.

On the up side, there is an opportunity for someone to lead by finding solutions and be prepared in advance for all or any of the above likely eventualities, if they were indeed to happen. However, time is quickly running out because once global events start to unfold they tend to generate their own momentum and as and when it happens, an economy like ours is either prepared to cope with the flow or not!