Every armchair economist will tell you our current account deficit is too big. And yet, Pakistan’s deficit, in terms of percentage of GDP, is similar to the US. So why is one country on the cusp of bankruptcy while the other continues to be one of the strongest economies in the world?

For one thing, the US dollar acts as the global reserve currency. For another, the US runs a persistent deficit to use foreign capital to finance the difference between domestic savings and investment.

Pakistan runs a deficit to fuel its obsession with import-led consumerism, which is why malls with foreign products team with activity while poverty levels deepen to new lows.

Published in Dawn, The Business and Finance Weekly, November 14th, 2022