What’s in store? economy in 2008

The year started in Pakistan with dark clouds on the horizon, but no silver lining visible anywhere. On the contrary, every thing points to toil, turmoil and tears, and more of the same till infinity.
This gloomy prospect is not a hypochondria’s raving, but a stark reality facing not only Pakistan but much of the rest of the world. Possible exceptions may be China, India and Russia, in that order.
However, the leader (so far) of the so-called ‘Free World’ and champion of the ‘New World Order’ and ‘Democracy every where’, whose currency was the world’s prime choice for international transactions ever since the WII – the USA – is now teetering on the brink of disaster. A lame duck administration limping on its way to the EXIT, has indulged in another of its desperate acts of fantasy, by cutting the basic interest rate, but the malaise which this was intended to cure, simply refuses to go away.
Recession is there and emerging quite briskly out of the shadows, to envelop USA economy, and consequently, much of the globe. Pakistan will be one of the most vulnerable nations on this score, even if it has a plethora of problems all its own, to start worrying about the fate of its prime benefactor.
Talking of lame ducks, we do not lag behind in this field either. Elections or not, our problems are not going to be solved in a short time, by any chance. Pakistan is a target of a multi-pronged attack from a hostile world, and there is no difference between (so-called) friends and foes, on this score. Our institutions are facing or have a potential exposure to a host of problems.
i) Budget deficits
ii) Revenue losses
iii) Indiscriminate borrowing – domestic
iv) Foreign aid (donations or loans) sources drying up, or terms becoming too stiff to be acceptable
v) Adverse balance of payments
vi) Dwindling forex reserves
vii) Risk of default on foreign loans at maturity
viii) Inflation – galloping at a ferocious rate
ix) Loss of purchasing power of Pak rupee
x) Mass discontent and violent demonstrations in streets
xi) Expanding terrorist activities
xii) Worsening law and order situation in urban areas
xiii) Loss of tourism income – immediate as well as prospective
xiv) Diversion of development funds to other purposes
xv) Growing hostility of neighbours, and border incidents, with potentialities to blow up into a full-scale war.
xvi) Necessity of devoting even greater amounts to defence, at the cost of civilian sector allocations
xvii) Compounding energy problems
xviii) Fall in production – agricultural and industrial, shrinking the taxation base
xix) Increasing unemployment, poverty incidence and population
xx) Political instability and social unrest
xxi) Brain drain, and so on.
i) Bank failures
ii) Insurance companies’ vulnerability
iii) Widespread insolvencies
iv) Closures of businesses and industries due to financial and energy crunch
v) Rising prices, and consequent under-nourishment and ill health of people
vi) Rise in illiteracy rate
vii) Mass migrations, and dislocations of family life.
viii) Increased divorces and splitting of settled families due to finance- based psychological problems
ix) Increased mortality rate among children and the elderly
x) Rampant unemployment due to layoffs, failing businesses and general despondency
xi) Housing shortages due to unaffordable rates of rent or cost… and so on.
To find an answer to all these problems is a Herculean task beyond a life-time, then who will take care of these and how? The question rings and rings, but nobody picks up the phone at the other end.
The sum total of all the above, reduced to monetary terms in Pak Rupees runs into a figure with astronomical connotations. Our present and future generations have to pay for it, but where are the opportunities to earn or raise that kind of money?
One final word to sceptics who may not agree with what I say. Just have a look at the esteemed daily ‘FINANCIAL TIMES’ issue of January 23, 2008 – the section titled ‘The World in 2008’ and the heading ‘ALARM FLAGS LITTER THE GLOBE’.

Copyright Business Recorder, 2008