Monday, October 17, 2011

a Global Disorder

A global disorder

By Irfan Aamir

One needs to have a deep understanding of Pakistan’s current political and economic direction, which despite the looming global economic and public debt crises still appears driven more by rhetoric and random decision making rather than planning and policy. However, one may not have to undertake a deep study to understand this impasse as most numbers are disappointing and challenges appear ominously skewed against Pakistan’s economic and political managers. How dismally Pakistan has performed on many global performance indexes across the various categories of governance can be easily browsed, though it may be hard to digest.

Pakistan’s political and economic news still read no different than they did 8 years ago, with monetary deficit, dearth of foreign investment and a looming power crisis as the main highlights. Past governments as well as the one today have stood committed to address all these challenges, which is exactly what the current incumbents have been saying since they took power almost 4 years ago. Government’s domestic debt, despite the recent rather generous slash in discount rate, still looks like a fallacy about to fall and bubble ready to burst. State Bank of Pakistan (SBP) governors may come or go, but the government will continue to borrow by printing currency at the rate of a billion dollars per month and keep handing out monetary policies with 2 months shelve-lives, if not less.  Such is the adolescent treatment to things that require serious responsibility and a much higher maturity level.

On the international economic scene ‘things’ don’t look so great either, in fact they haven’t looked this grim in the recorded history of human economics. As some economists and thinkers are putting it, the only thing that looks certain is more uncertainty. “Un-known unknowns” as the former US Defence Secretary would probably love to brand this imbroglio. The inevitability of an uncertain but evident change in global economic order is kicking some serious clouds of doubts and fears, making the entire system jitterier and lacking positive sentiments.

When the global finance managers and economic leaders were able to deliver some recovery in late 2009-10, ostensibly by pressing their governments to pump in trillions of dollars and euros for interventions and bankrolling the multibillion dollar corporations in the West, many thought that the global economic crisis had been contained. Recent developments, nevertheless, indicate that ‘financial market volatility’ is here to stay for the foreseeable future. What is becoming more apparent is that the recent short-term macroeconomic or regulatory policy initiatives in a number of economies across the world, especially the West, have failed to provide the desired confidence while the planners appear sans any plans for a long-term economic growth. Is it time to scramble?

Recently released Global Agenda Survey 2011 by the World Economic Forum (WEF) only confirms the varied fears and doubts everyone has about the current unending economic uncertainty. Global Agenda Council members were asked to identify ‘the’ most important international trends and how they would impact the global economy, society and environment in the next 12-18 months. The presentation, which identifies 20 trends that can and will impact the way people do business, how societies co-exist and what the Global Agenda Council members have to say about the trends can assuredly trigger some nerves and it is about time that they did. 
Of the trends highlighted in the WEF Global Agenda Survey 2011, analysts believe many are already at work at home in Pakistan.

Public Debt Crisis and Weakening Job Market are ranked as the ‘most important’ global trends and challenges. As bizarre as the relevance may appear, in case of Pakistan both these trends are not only visible but look fairly unmanageable at this point.  A country which borrows more than it has the capacity to earn or service, and is facing a mounting debt crisis that it is scrambling to service with no donors or Friends of Pakistan around reaching for their cheque books. What is even more serious is that the economy is not producing jobs either. By the admission of the Planning Commission itself, Pakistan needs to produce 1.5 million jobs each year consistently for the next few years. The economy, however, is producing only 0.3 million by government’s own estimates.
Some other rather disturbing trends and challenges for the next 18 months listed high on the top ten in the Global Agenda Survey 2011 are Economic Inequality and Social Unrest, crucial areas where Pakistan has demonstrated a lower level of excellence consistently. What is as annoying is that the state in which Pakistan and its economy is today isn’t the doing of ‘enemy nations’ but mostly of those civilian leaders who allegedly want to work for the people and those military leaders who were politically elected to decide the fate of our country. Promises and unending rhetoric is the most consistent thing about a very inconsistently managed country and its leaders. The question is, how long can they continue to befool or mislead?

The writer is a Karachi-based communication consultant.

With the courtesy of Money Matters, The News International

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