THE economic situation may well be seeing a turnaround, but the economic news, and the figures, are only good when compared with the recent past, when they have been worse. The inflation figure, based on the Consumer Price Index, showed overall inflation at 19.07 percent, and food inflation at 19.73 percent. Only when we turn to the Wholesale Price Index is there something of an improvement: in April it ran at 11.08 percent, but a year ago was 19.79 percent. All of the above inflation rates are horrible, and represent backbreaking increases for the common man and the average wage-earner, but horrible as they are, they still represent an improvement, because there have been worse before. Similarly, the trade deficit has come in at $12.71 billion up to March 2009, with total exports so far of $13.41 billion, against imports of $26.12 billion. This is less than the deficit last year, which was $14.53 billion, and is thus down 12.51 percent. Yet it is still a very high figure, and should not obscure the fact that exports actually have declined, and that the volume of trade has gone down. The key to maintaining a trade balance is to export at least as much as we import, and placing a restraint on imports has been one way of managing, which we have abandoned in this era of globalization. The world economic crisis, and especially the surge in oil prices, has made exports all that much more crucial. But this is precisely the time when exports have not been encouraged, and have been collapsing. Exports are said to be down because of the unprecedented gas and power loadshedding, the depreciation of the rupee, and increases in production and capital costs, apart from other, more chronic, production constraints. In the midst of all this, the State Bank still insists on high interest rates. As a result of falling trade, inflation is coming down, but the benefits are not being passed on to the exporter, because the State Bank insists on mopping up an excessive liquidity only it can see.