Surge in exports: Businessmen urged to bring innovation in products

ISLAMABAD: To increase the exports of the country, Pakistani businessmen will have to build trust and bring innovation in their products. This was the crux of a webinar tilted “A Vision For Forgotten Economy-Part” organised by Pakistan Institute of Development Economics (PIDE) here on Tuesday.

Key speaker Dr Abdul Jalil, a professor of economics at PIDE while presenting his findings regarding the export and exchange rate said that it is a matter of fact that whenever export/import ratio goes down, trade deficit in terms of imports widens and vice versa.

He said that per capita imports of Pakistan in comparison with other regional countries are the lowest. So as we are at the lowest in exports that causes the damage. Export to import ratio of Pakistan as compared to Bangladesh, China, India, and Vietnam is extremely low, this is because of low trust and no innovations, Jalil said.

Overvaluation of exchange rate has been a norm rather an exception for Pakistan. Protection of Exchange Rate (ER) has gone so deep in the mindset of the policy makers that they injected billions of dollars just to keep exchange rate parity at their desired levels. Even in the last decade from 2008 to 2018 Pakistan has gone into International Monetary Fund (IMF) program three times.

He said that at present, Pakistan has not sufficient foreign exchange reserves for two months imports, adding that if the government was managing to get around $5 billion in the next few months, it can survive the next eight months but still in 2023 the country would face serious economic crisis.

Dr Jalil said that the State Bank of Pakistan was intervening in the currency market sometimes for political reasons when developing countries such as Pakistan tried to keep their currency overvalued to keep on doing market intervention with an objective to protect exchange rate until the time they ran out foreign exchange reserve to play with. He said that the central banks should not inject dollars in the market just to maintain the exchange rate in certain level but it should intervene in real investments such as using reserves on importing oil or generating assets.

He further said that according to the IMF only 29 countries in the world are following purely flexible exchange rate regime, rest are following managed float exchange rate regime.

Copyright Business Recorder, 2022