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January 14, 2020

New model

Newspost

 
January 14, 2020

This letter refers to the editorial ‘Economic impact’ (Jan 13, 2020) which highlights the hardship faced by the ordinary citizens due to the ongoing economic downturn. The government’s incoherent and disjointed policies are causing economic slowdown and difficulties for the vast majority. Millions of families have slipped below the poverty line, while unemployment is growing. With the supply side remaining stagnant, demand stands compressed by higher inflation, higher tariffs on utilities, imposition of indirect taxes and higher interest rates. Given the dampened demand the improvement in the trade and current account deficits is superficial as exports remain sluggish owing to supply side constraints. Reserves are being built up through borrowing and foreign investment in short term government papers. The latter is a high cost debt. With lower economic activity, revenue collection is in steep

decline. Domestic investment remains scant.

The government must

create an environment conducive for growth in business. Its economic model should be based on reviving the agriculture sector, which has been ignored for many years, and expanding the manufacturing sector, which remains hugely under-developed.

Arif Majeed

Karachi