With the commodity production improving, there is a noticeable pickup in exports, mainly to the Middle East, supporting the country’s apex trade body’s view that more resources can be generated by industry and trade than by knocking at the International Monetary Fund’s doors.

With some initial increase in farm output, food exports grew 30 per cent in the first four months of the current fiscal year to $1.94 billion from $1.49bn compared to the same period last year, according to the Bureau of Statistics data. Exports to the Middle East bounced back with a growth of 21pc. The government has rejected the Pakistan Sugar Mills Association’s demand to export half a million tonnes of surplus sugar, fearing a price hike in the domestic market.

Large-scale manufacturing expanded for the second consecutive month in September, with year-on-year growth of 1pc, reversing a trend of the previous 14 months of contraction. The export proceeds of merchandise grew by 13.6pc to $2.7bn in October against $2.38bn over the corresponding month of last year. However, on a month-on-month basis, the export proceeds increased 9.3pc to $2.7bn.

Yet another noticeable development is that the State Bank of Pakistan reports that the returns on T-bills have been reduced up to 50 basis points, which, an analyst says, indicates the future interest rate trend. The Real Effective Exchange Rate index surged to 98.6 in October from 91.7 in September.

The challenge lies in boosting commodity output to create substantial trade surpluses after meeting domestic demand

The current account gap narrowed year-on-year by 91pc to $74m in October but widened month–on–month from $446m in September, remaining below the $100m forecast by the central bank governor. Workers remittances rose by 12pc in October to $2.46bn.

However, the risk of a growing external financing gap is high. Doubts exist about whether the above trends can be sustained. In the absence of needed reforms, the underlying economic conditions remain stressed, say analysts, noting that the present macroeconomic stability is superficial and fragile, only a small shock away from falling apart.

A 19-member Industrial Advisory Council has been formed with Federal Minister of Industry and Production Gohar Ejaz as its chairman to build on what has been achieved. It will submit its report in 10 weeks.

Composed of officials from all relevant federal ministries as well as provinces, the council is expected to come up with feasible recommendations to boost industrial output and exports. Its members include federal secretaries of ministries of finance, commerce, industry and production, the Federal Board of Revenue chairman and all provincial chief secretaries, including those of Azad Kashmir and Gilgit-Baltistan. The Ministry of Industries and Production will provide secretariat support.

It is not clear from the nomination of business leaders how effectively the representation of various regions and industry segments in the council is needed for synchronised industrial development.

To return to the foreign trade sector, critics rightly point out that food exports contributed to inflation in an environment of low wages and a high unemployment rate. But it may be noted here that the rupee depreciation, high-interest rates and fiscal expansion are major causes of high inflation.

The challenge lies in boosting commodity output to its full potential to create substantial trade surpluses after meeting domestic demand.

Owing to prolonged inflation worldwide, seen in the larger context of economics as a discipline, a view has emerged that leading economists have misdiagnosed inflation and need to reexamine their core beliefs. The reputation of central banks as effective inflation fighters has also been tarnished.

Unless the market is rigged, an increase in commodity production should normally help stabilise supplies and prices, with other factors of production remaining positive.

To quote Dr Hafiz A. Pasha, the three labour-intensive sectors in the economy are agriculture, manufacturing and construction. Their share in employment significantly exceeds their share in national value-added. These sectors have generally seen a contraction in their respective output in FY23, and thus, overall conditions in the labour market worsened considerably.

He says efforts ought to have been made to promote diverse employment generation schemes rather than focusing on raising the pay and pensions of government employees.

Similarly, during the local government elections held in June and July 2022, peasants and rural workers were stated to have been entirely overlooked and not included in the party-based elections in Sindh.

In its eighth report on the ‘State of Peasants Rights in Sindh 2022’, the Hari Welfare Association highlighted the dire plight of the peasants and rural workers. It noted that the provincial government was virtually indifferent towards their concerns. Peasants’ rights were violated, budget allocations for improving the lot of peasants often remained unutilised, and those affected by floods were not adequately compensated.

“Nobles and feudal lords are not burdened by the strict conditions of the International Monetary Fund,” says All Karachi Industrial Alliance Chairman Mian Zahid Hussain while referring to unfair taxation policy.

Analyst Hamza Hidayatallah says the greater spread of wealth is inevitably one of the multiple factors leading to a more successful and stable state, with the people being happier and prosperous.

For value-addition and diversifying commodity production and export destinations, as well as competitive import substitution, on-the-job training of workers/peasants in innovative ways of doing things is necessary. The acquired new skills should be fairly compensated to motivate them to improve their productivity.

Published in Dawn, The Business and Finance Weekly, November 27th, 2023