IN its latest monetary policy statement, the State Bank says manufacturing will “remain constrained due to energy bottlenecks”, even as the speculative and trading economy gallops along. Pakistan’s exports are falling, due in part to “weak demand” in destination countries, but also because of the falling price of cotton.

The statement steers away from the identifying causes of the drop in exports, saying only that the trend is “further challenged” by these factors. Future growth, therefore, must come from agriculture, it says, pointing to the Rs100 increase in the procurement price of wheat. The statement is silent on the ongoing growth in the services sector, nor does it say much about the real meaning of the steep increases in the stock market. But the picture that emerges from the statement is one of sagging growth in manufacturing, while agriculture remains hopeful and services and speculative trades gallop along.

This composition in the country’s growth profile is worrying. Manufacturing is the most reliable engine of growth for our economy, and the biggest job-creating sector. Exports are critical to building sustainable foreign exchange buffers, especially at a time of escalating foreign debt service obligations.

It is important to acknowledge the dire situation developing in the manufacturing sector and in exports and not hide behind growth mirages in speculative trades and endorsements from Moody’s. It is sad that a year and half into its tenure, the party that billed itself as a business-friendly government is, instead, presiding over a steady stagnation in manufacturing and exports, while looking towards the sale of state assets and foreign borrowing as a way to build reserves.

The State Bank has touched the issue very gingerly in its statement, which is still an improvement from its previous pronouncements. This acknowledgement now needs to be built upon by further dilating on the reasons behind, and the possible resolutions of, this troubling state of affairs. Whatever political challenges the government may be facing, these should not distract from the primary obligation to restart economic growth.

Published in Dawn, November 18th , 2014