The economy is currently delivering a mixed bag of results if some are the indicators are taken at face value. From Large Scale Manufacturing (LSM) in the country posting negative growth of 5.96 percent, to the Current Account Deficit (CAD) shrinking by a whopping 71 percent in the last eight months, there is quite naturally some confusion as to whether the economic outlook moving forward is looking positive or negative. Some of the instability quite naturally has to do with the coronavirus, but even beyond the pandemic, there are both undesirable and constructive features in the economy, and one’s expectation on future fiscal matters varies greatly depending on the indicators they focus on.

On the surface, a negative growth rate in LSM would normally imply that the CAD does not shrink either; after all large-scale manufacturing has a lot to do with improving the trade balance of a country, as a lot of those commodities will be exported as well. The government’s one-sided strategy in this area – drastically reducing imports by any means necessary – has essentially managed to get half the job done. Pakistan’s path to prosperity entails that we move towards more homegrown production and reduce the use of imports; so far only the latter has happened. Some factors such as the depreciation of the rupee and now the virus have helped the government immensely, but this does not take away from their stellar achievement.

Now that the government has done what many thought was impossible, it is time to move on to the next phase. Ensuring that the current account deficit is here to stay and improving upon large-scale production go hand in hand. This is by no means an easy task; improving on industrial capacity and taking advantage of existing facilities require stable energy supply, regular tax refunds and policies that facilitate the growth of investment. Given that the government has managed to cut down imports drastically, even half of the success achieved with inflows would benefit the export sector immeasurably.