Current Affairs: Economy

Question 1

What is the GDP of Pakistan?

Answer 1

Well, the actual figure provided by the IMF is from 2021 and that is $348bn and we have seen GDP growth of almost 6% in 2022 and 0.6% in 2023.

Question 2

What is the GDP growth of Pakistan?

Answer 2

0.6% (23) 6% (22)

Question 3

What is the current account surplus/deficit?

Answer 3

$388mn (this QTR) and ($1.1bn) (Last QTR)

Question 4

What is the current interest rate in Pakistan?

Answer 4

it is around 22%

Question 5

What do you think are the reasons for current economic crises?

Answer 5

One of the major reasons for the current economic crisis is that Pakistan is an import-led economy. We rely on imports for not only crude oil, liquid natural gas, but also, for tea and wheat. I think this over reliance on imports resulted in a balance of payment crisis as our exports merely contain linen and rice which have great competition from China, India, and Thailand.

This results in a current account deficit as our imports outpace the exports. To finance such deficit, the government has to borrow foreign currency to afford such imports.

Now we already have scarce foreign reserves and when the government tries to cap the prices of Petrol and electricity during the global price rises due to Russia-Ukraine war, our reserves took a serious hit!

Adding in political instability and floods in 2022 that resulted in damage of $30bn!

Question 6

What is a current account?

Answer 6

1. The current account balance (CAB) is part of a country’s financial inflow and outflow record.
2. The main components of the current account are: Trade in goods (visible balance), Trade in services (invisible balance), Investment incomes, and Transfer payments.

Question 7

What is a balance of payments?

Answer 7

1. BOP shows a country’s inflows and outflows
2. The BOP has three components: the current account, the financial account, and the capital account.
3. The financial account includes transactions that result in a change of ownership of financial assets and liabilities between a country’s residents and non-residents.
4. Some examples of transactions recorded in the capital account include foreign direct investment or loans from foreign governments

Question 8

What are the solutions for current economic crisis in Pakistan?

Answer 8

1. Our main priority should be to avert default right now, which can be done by fulfilling the conditions put forward by the lenders.
2. We should promote businesses in the export industry so we do not have to rely on foreign currency loans to afford our imports. This could be started by reducing red tape in export oriented businesses.
3. Government should not intervene in the market and let the market forces determine the prices. Even the PKR should not be pegged. This would get negative public response but it would be beneficial for the economy in the long run.
4. Discover more avenues to increase revenue collection for the government and reduce fiscal deficit. Examples include, real estate reforms. There should be a concept of second home tax, so there is a proper redistribution of wealth.

Question 9

How is the interest rate determined?

Answer 9

Central bank (state bank of pakistan in our case) determines the interest rate (KIBOR) as a part of its monetary policy to control economic factors like gdp and inflation.