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During August newly elected government led by Imran Khan’s Pakistan Tehreek-i-Insaf (PTI) will get the control on the formation and implementation of economic policies of Pakistan. Its two top priorities should be boosting foreign exchange reserves for sustainable debt servicing and containing trade deficit by restoring competitiveness of the local manufacturers. Both these priorities hinges on facilitating farmers and industrialists in boosting production and productivity. Since Pakistan imports huge quantities of energy products and nearly 65 percent of its exports comprise of textile and clothing, keeping an eye on the movement of prices of crude oil, cotton and fertilizer is a must.
Global political developments and rising hostility over international trade have heightened caution over global economic growth for the rest of 2018 and onwards. In the United States, the recent fiscal stimuli have boosted growth, while industrial production and GDP data from China, European Union, India and Brazil exhibit moderation. Outcome of trade disputes remain in the spotlight, with the IMF forecasting a decline in the global GDP growth. Policy initiatives, trade actions and retaliatory measures adopted by the US and China may augment fissures for Pakistan market.
The new government is likely to opt for curtailing import and imposing tariffs as part of IMF negotiations. A quick review of movement of prices of commodities price during July offers an opportunity to the new government to revisit its economic policies.
Crude and POL products have the largest share in Pakistan’s import bills and move of prices on...