Rise of Inflation Rate in Pakistan
In the upcoming 18-24 months the inflation rate in Pakistan will increase more because in the Covid period America printed 40% more dollars, due to which the dollar rate came to 170+ which was about 150 in the beginning of the pandemic. It will increase more and will touch 210+ in the coming 18-24 months.
We as Pakistanis are also responsible for the rising inflation rate because the import rates are more than double higher than export rate. We import more than our exports and we pay in dollars, if we close our imports and manufacture everything in our country, that’s not the solution because we can’t ignore the oil imports. Our imports are 50% oil products and we pay it in dollars, oil is our everyday commodity that’s why we are bound to import oil.
The alternate we need for oil is we should move towards electric innovations, Pakistan can produce electricity from dams there are a lot of resources in Pakistan to produce electricity, Pakistan produce 25% of oil within Pakistan. Government should increase that figure to 50% by bringing private companies to Pakistan. The value of the oil will decrease in the future because of electric innovations, so Pakistan should cash out the oil from its land because if the value of oil decreases it will be no profit for Pakistan.
To reduce our imports, we as Pakistanis should go for alternatives and should produce the imported products within our country Pakistan. This will help us to decrease the imports and we can be the exporters.
Unfortunately, our 60% of the exports go into buying raw material as an import; we should focus more on manufacturing raw material within Pakistan. Due to the increase in imports, the value of our Pakistani rupee is decreasing every year and due to this, the inflation rate increases 4% every year.
Pakistan's export is 31 billion dollars per year only which is very less against other small economies in the world. We have to increase our exports by making small manufacturing industries to produce raw materials and products for our country to avoid imports. We have to develop skilled entrepreneurs and we have to take risks for the sake of our Pakistan.
Written by: Ali Raza, SZABIST University, Islamabad
Pakistan can have a tough time in shifting its economy towards green technologies and reducing its oil imports, as this agenda is not the major agenda of any political party. And doing this requires a scale back as most industrial processes are designed as per old technology which is heavily dependent on oil. Suppose if any government goes towards green policies, it will not be a popular approach as the government will need to increase unemployment rates in almost all the sectors that are dependent on oil. So I think doing this is not possible. What do you think?