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In past few days I have seen so many shit takes on economy from Miftah Friends, PML N touts and so called financial reporters that I had to write this thread. It seems like all of these people got their finance / economic education from military academy.
A
to shut them all.
A
to shut them all.
Please stop using term “Mushkil Faisla” there is not even a decision.
You make a circus clown FM and ask him how to remove deficit, he will tell you increase prices and start selling things at cost + premium.
This could have been golden opportunity for Pak in IK hands.
You make a circus clown FM and ask him how to remove deficit, he will tell you increase prices and start selling things at cost + premium.
This could have been golden opportunity for Pak in IK hands.
First come first; world is in STAGFLATION since Q1 2022 your fav. News source just don’t know yet. Developing countries (like Pak) are familiar with stagflation. Stagflation is characterized by
1-High inflation
2-Low Growth (High unemployment)
Now US, EU are facing this.
1-High inflation
2-Low Growth (High unemployment)
Now US, EU are facing this.
CAUSE AND IMPACT OF STAGFLATION
Last time world experienced stagflation was in 1970s. Same chain of events again in 2020s.
Supportive monetary policy (Low Interest rate + Stimulus check for COVID) 
High demand as people are rich
Commodity Prices goes up
Last time world experienced stagflation was in 1970s. Same chain of events again in 2020s.
Supportive monetary policy (Low Interest rate + Stimulus check for COVID) High demand as people are rich Commodity Prices goes up
Supply shock due to external factors (Russian Embargo + Covid - In 1970s it was Arab States institute embargo again Israel and allies + Iranian revolution)
Central bank of developed countries tries to reduce demand by raising interest rate/financial tightening To defend local currencies emerging markets also raise interest rate and try to front run ECB / FED
Since tighten monetary policy can only reduce demand and not create new commodities, rich countries keep on gobbling up commodities (at higher prices) as they can afford while poor countries start to go in tailspin death spiral trying to manage debt + currency + imports
Stagflation took decade last timeYour short-term policies won’t work here so STOP WASTING your critical resources (reserves) for short sighted gains.
Stagflation WILL CONTINUE until Russian supply stays out of market
Weak countries fall first other follows.
Stagflation is macro event and this is where OPPORTUNITY isAs global inflation is high, price becomes decision factor.
If you are selling product at cheaper than your competition you can get a lot of world’s business. PRICE UNDERCUT AND EXPORT IS THE NAME OF GAME
US EU b like:
South east Asia was the clear winner in 1970s stagflation period. All those countries setup launchpad in stagflation period and then just sky rocketed.
South Korea and Taiwan are most similar to Pak so we will discuss those.
LOTS OF DATA, CHART PORN AND BIG BRAIN STUFF
South Korea and Taiwan are most similar to Pak so we will discuss those.
LOTS OF DATA, CHART PORN AND BIG BRAIN STUFF
Like Pak. Both S. Korea and Taiwan had to import virtually all oil needs (Import / GDP). Like Pakistan They were also running a trade deficit where exports < Imports
Both Countries Followed Export oriented policy– Increased Export/GDP by 4x for S. Korea and 2x for Taiwan 1970-1980Facilitated Labor intensive manufacturing/industrialization - Manufacturing/GDP increase of ~50% in 1970-1980
S. KOREA POLICY RESPONSE:-Korea adopted laissez-faire attitude toward oil and passed MOST (not all) of the oil increase
-Continued to follow expository monetary growth
-Inflation doubled to 30% but policy makers decided inflation was bearable cost for rapid economic expansion
TAIWAN POLICY RESPONSE-Taiwan kept the oil prices artificially low to maintain price advantage in export and alleviate burden on low income
-Taiwan tried to keep exchange range constant which was devastating as they lost competitiveness
-GDP growth fell, Import up, export down
RESOURCE DIPLOMACY;-As stagflation is caused by supply shock of commodities, Resource diplomacy is really important. -S. Korea actively strengthened its ties with Oil producing Middle east countries and actively participated in ME construction boom as supplier.
MICRO ECONOMIC RESPONSE:LONG TERM STRATEGY
-Shifting from high energy industry to less energy intensive industries
-Subsidies for increasing energy efficiency
-Non price conservation policies
-Fuel Substitution to Nuclear
SO HERE IN 2022 "IN ALL IT'S WISDOM" PML N IS DOING EVERYTHING OPPOSITE.
so those "Mushkil Faislay" is basically political price of being ever incompetent and retard
so those "Mushkil Faislay" is basically political price of being ever incompetent and retard
Bonus charts 
Last few tweets are Appreciation tweet for IK. He turned around Pak economy, took us out from COVID. Created an opportunity with Russia that could have put us on map by reducing our oil bill by 15% at least. We could have had 7% GDP growth but now we will have -5% in $ term.
This is like 30,000 Rs decrease in yearly income of per person on avg (More in real term). Only if people would know magnitude of incompetence and blunders of PPP PML N.
That’s my Sunday down the drain so please share with your friends SO MY TIMELINE STOP BEING MORONIC.
That’s my Sunday down the drain so please share with your friends SO MY TIMELINE STOP BEING MORONIC.
This is not first stagflation; we are not the first country who is dealing with these challenges so just study and you will get 100s of playbooks you could follow. Please don’t try to improvise, other than Ik our politicians don’t have brain cells to deal with such issues.
