Pakistan as a state is still functional though there are fears that a prolonged political-cum-constitutional crisis may eventually paralyse it — at least temporarily. On the surface, life is normal, though very tough for the majority of Pakistanis.

But at deeper levels, the normalcy of national life remains under threat. Regardless of the outcome of the ongoing political/constitutional crisis revolving around elections in Punjab, the need for adjustments in the relationship between the state organs and their affiliate bodies will remain in place.

How those adjustments are made, or whether they are delayed again, will redefine the characteristics of our national life for a long time to come —and have a telling impact on the national economy both in the short and long run.

Is there a realisation of such a possibility at the highest levels of the state organs, including the parliament, superior judiciary and the government —as well as “the all-powerful establishment”? Do recent events indicate that the realisation is there? How best can things be sorted out to avoid such a possibility? Your guess is as good as mine. No one can say anything, for sure. Let’s hope for the best.

The arrangement of foreign funds to avoid further depletion in forex reserves and to qualify for IMF’s tranche will not automatically address the increasing economic issues

Having said that, let’s look at how fast the economy keeps deteriorating amidst all the political/constitutional chaos. The latest update of the Pakistan Bureau of Statistics (PBS) shows that large-scale manufacturing (LSM) output in July-Feb 2022-23 fell 5.56 per cent, and the year-on-year decline in February alone was 11.59pc.

The bureau’s detailed data on the country’s external trade of goods also reveals that during July-March 2022-23, Pakistan’s food imports were almost double its food exports — $7.334bn against $3.815bn.

This sharp decline in LSM output can be expected to become even sharper at the end of the fiscal year in June, and the ratio of food exports to food imports cannot be expected to change significantly in April-June.

Large-scale manufacturing witnessed a worsening energy crisis and fatter energy bills after February. And, political chaos in the industry that always takes a toll on manufacturing has also gone from bad to worse after February.

Similarly, there is nothing in sight to suggest that the food imports bill will fall in April-June, and that too amidst softening of import restrictions from the beginning of this month. Nor is there anything to encourage us to believe that food exports will grow significantly during this quarter.

Declining LSM output also reduces the growth of small-scale industries, more so when the entire economy is in trouble as it is right now. And that causes a fall in total industrial output and leads to unemployment. That is what we have been experiencing in Pakistan.

In the absence of industrial growth, agriculture can be a game changer for the economy. But due to last year’s super floods and record escalation in input prices, including energy prices, agriculture, too, isn’t doing well. In fact, that is one big reason for the current year’s big rise in food imports and a huge decline in some food exports.

During July-March 2022-23, Pakistan had to import 14.7pc more wheat than in July-March 2021-22. During the same period, it exported about 19pc less rice volume than in a year-ago period. That, in turn, led to a greater outflow of foreign exchange than the inflow.

Overall trade merchandise trade deficit in July-March 2022-23 stood around $22.9 billion despite all the tariff and non-tariff restrictions introduced earlier to contain it.

In the recent past, much hope was pinned on services exports for compensating partly for the deficit in merchandise trade. But the latest PBS stats reveal that in July-Feb 2022-23, services exports grew just 6.5pc on-year to $4.78bn — and the country booked a small services trade deficit of $340bn as services imports consumed around $5.12bn.

It is obvious that in services trade, too, Pakistan can either book a nominal deficit at the end of the fiscal year in June or, in the best-case scenario, report a small surplus — too little to impact overall external trade.

So, the country will enter the new fiscal year in July with a somewhat contained but volume-wise still large external trade deficit, negative growth in the industry and very low or no growth in agriculture.

According to the already published estimates of the World Bank, the Asian Development Bank and the International Monetary Fund (IMF), Pakistan’s economic growth in FY23 (ending in June) will be somewhere between 0.4pc-0.6pc.

With the industrial sector going through one of the most testing times in Pakistan’s history, agriculture suffering massively in the wake of the super floods, and the services sector remaining depressed, the new fiscal year will open with huge challenges for policymakers.

Are politicians and (supposedly) apolitical forces that share the current “hybrid regime” prepared to meet those challenges? Well, it’s difficult to say based on what has so far been shared with the media at large.

Instead, politicians and their backers in “the establishment” are apparently doing too little to end the further deepening of the current political/constitutional crisis that keeps compounding the economic challenges.

All that the people in power are telling the nation is how tirelessly the civil-military leadership has worked in recent weeks to win assurances of further forex support from friendly countries. That is undoubtedly an achievement in the current environment.

But the arrangement of foreign funds to avoid further depletion in forex reserves and to qualify for the IMF funds will not automatically address all structural economic issues that challenge us now, and that will challenge more severely in the next fiscal year. What the country needs urgently is a clear, detailed Economic Revival Roadmap. Where’s that?

Published in Dawn, The Business and Finance Weekly, April 25th, 2023