Imports down: a good omen?

Economic indicators are pointing in the right direction. Trade data released by the central bank last week show some signs of improvement. Not all is well yet, but at least Pakistan seems to have taken the first step towards economic growth. Or it is just a rosy dream?
Current account deficit for the first three quarters of the current fiscal year was a hefty 67 percent narrower over the previous year. While exports remained more or less in the same range, imports declined by a little over 10 percent year on year.
An overall slowdown in global economic output and easing commodity prices compared to the previous have had a positive impact on the countrys economy, being heavily reliant on oil imports.
While a decrease in imports may provide some relief when viewed from the current account perspective, a different approach makes them very troublesome indeed. A breakdown of the numbers reveals broad based decreases in almost every sector of the economy. Food imports were down 25 percent, machinery 23 percent, and oil 13 percent.
Slowdown in imports of capital goods has long been a focus of discussion in the economic circles. Declining machinery and heavy metal imports steadily reduce the future productive capacity of countrys industrial units. Exports from Pakistan have mainly been in unfinished good. Despite a 3 percent overall decline in exports, raw cotton exports are up 125 percent.
Even more alarming is the decrease in the consumer goods imports. Purchasing power of consumers is on the slippery slope of decline. What the country really needs, according to economists, is a significant increase in the national savings rate. However, data points suggest that, at least for now, that is becoming a distant dream.
Pumping in some strength that is likely to continue in the near and long term is the influx of remittances from Pakistanis working abroad. Numbers were up 18 percent for the first three quarters of the year. However, the monthly changes reflect a slowdown in receipts in recent months.
The security situation is taking its toll on investment prospects and the trickle down effects are slowly eating away the possibilities of growth in the years ahead. As much as anyone would hate to say, the largely uncontrollable factor of the security situation is very much dictating the economic indicators.