Reports that some of those fresh export orders have been called off amid threats of further cancellation should wipe the smiles off the corporate and government faces.
A series of different news reports suggest that up to $5 million worth of orders, notably in the textile sector, have been withdrawn by buyers in the UK and US. The cancelled amount isn that big so far, but if it grows, it will subject the so-called stabilization, widely termed as a
ecovery by optimists, to serious question.
Here is how the chain of events may impact the economy: after foreign buyers gave new orders to exporters, those nearly idle-sitting producers go euphoric and purchase raw materials in excess just in case if demand increases more than expected.
In turn, the raw material manufacturer will have produced more to meet any possible increase in raw material requirements. Accordingly, both finished goods producers and the raw material makers hire new labor as well.
In the meanwhile, however, foreign buyers say oops it was a mistake we are still in recession and we would like to rollback our orders - leaving local manufacturers oversupplied, possibly on borrowed money that might lead to higher amount of troubled loans for banks, and hurling those newly employed back into the pit of joblessness.
And oh, the central bank boss Salim Raza might also have to go back on his assessment that the economy is growing, and there is no need for aid. In any case, the government will keep scrambling for funds, borrowing more from private lenders leaving private borrowers on the sidelines. As for the stock market participants, they would keep crying bulls for so long as they can, until things hit the fan. The canvas painted here, might be a far off remote possibility, but just in case it happens: the optimists have been cautioned.
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