The theory that Pakistan is not built for 5 percent growth on a sustainable basis keeps making rounds. This time is no different. The crisis is here, and from the outside, it does not look much different from what the outgoing government inherited back in 2018. Just because the outcome is pretty much similar, it should not become basis for causation analysis, outrightly rejecting the idea that Pakistan can go on a growth trajectory beyond 5 percent.

The current account is where it all goes bad, after every few years. Previously, it was stagnant exports and remittances, with briskly growing imports when CPEC energy phase was in full throttle. It was designed such to explode one day, despite relatively lower commodity prices. Barring a brief period of unrest in Middle East, there were not any major shocks to the global supply chain and commodity prices. Yet, the country reached where it did in 2018. The fixation with keeping currency artificially stable played its part. And once the lid was lifted, the floodgates opened.

Recall that much of the import growth in the lead up to 2018 current account crisis was quantity driven. The equation has completely changed come FY22 – as prices dictate overall imports. Much sweat has been lost over the rise in petroleum imports, which have more than doubled in 10MYF22 year-on-year. Unit prices have gone up by 72 percent from the same period last year, whereas volumes are up 18 percent.

Could more aggressive retail pricing have led to lower growth in petroleum import quantity? Maybe, but not much, given the natural rate of growth and the ever-increasing reliance of Pakistan’s power sector on imported fuel. The 2016-18 machinery import growth had ensured Pakistan’s import bill is going to remain elevated, as more than 80 percent of the last 15,000 MW in Pakistan have been built on imported fuel types.

Among major categories, other than petroleum and medicine, all growth is price driven. Fertilizer prices have doubled in a year, palm oil up by 50 percent, pesticides, pulses, cotton, steel – all have seen 30-50 percent increase in unit prices. The imported quantity growth has either remained stagnant or has declined for a few categories.

Covid and Russia-Ukraine war are not oft-recurring events and drawing conclusions or comparisons from a current account deficit hugely based on the outcomes of these two – can be misleading. While Pakistan may or may not genuinely have problems growing beyond a certain rate at sustainable basis – it is not fair to base the analysis on outcomes driven by unprecedented events. Who is to say Pakistan could not have sailed smoothly if there were no vaccine imports or had Moscow not attacked Ukraine?